See how your ETF investment grows over time
Most South Africans who start investing pick an ETF without looking past the fund name and maybe a recent performance number. That's backwards. Past performance is the least predictive factor. What you should be looking at first is the TER, second is the tracking error, and third is what index the ETF actually tracks — because two funds both called 'Top 40 ETF' can produce meaningfully different outcomes over 20 years if one charges 0.15% annually and the other charges 1.4%.
Here's how to actually compare ETFs in South Africa so you pick the right fund rather than just the most recognisable one.
Start Here: What a TER Actually Costs You Over Time
The Total Expense Ratio (TER) is the annual fee taken from your investment. It sounds small in percentage terms. In rand terms over 20 years, the difference between a low-TER and high-TER fund is often larger than the initial investment amount.
| Annual TER | R100,000 over 10 years (8% gross return) | R100,000 over 20 years (8% gross return) | Cost vs 0.1% TER over 20 years |
|---|---|---|---|
| 0.10% | R213,000 | R454,000 | Baseline |
| 0.25% | R210,000 | R441,000 | -R13,000 |
| 0.50% | R205,000 | R422,000 | -R32,000 |
| 1.00% | R196,000 | R387,000 | -R67,000 |
| 1.50% | R188,000 | R355,000 | -R99,000 |
| 2.00% | R179,000 | R325,000 | -R129,000 |
That last row is real: a 2% TER versus a 0.1% TER on the same R100,000 investment costs you R129,000 over 20 years. The fund with 2% fees would need to significantly outperform the 0.1% fund year after year just to break even — and decades of data show active funds rarely sustain that consistently.
💡 The cheapest broad-market ETFs in South Africa have TERs around 0.10%–0.20%. The most expensive actively-managed unit trusts charge 1.5%–2.5%. Always look at the fact sheet or minimum disclosure document (MDD) for the exact TER — it must be disclosed by law.
Tracking Error: Is the ETF Doing Its Job?
Tracking error measures how accurately the ETF replicates its benchmark index. A perfectly-replicated index fund would have zero tracking error. In practice, all ETFs have some — because of rebalancing timing, dividend reinvestment delays, and transaction costs inside the fund.
For broad market index trackers (Top 40, S&P 500), a tracking error below 0.5% per year is good. Above 1% is a red flag — it suggests the fund is struggling to efficiently buy and hold the underlying shares. You can find tracking error in the fund's MDD or on the fund manager's website.
| Tracking Error | What It Means | Acceptable? |
|---|---|---|
| 0.0% – 0.3% | Excellent replication | Yes — very good |
| 0.3% – 0.5% | Good replication, minor slippage | Yes — acceptable |
| 0.5% – 1.0% | Moderate slippage | Acceptable for some fund types |
| 1.0%+ | Significant deviation from index | Investigate why — often a concern |
What Index Does It Actually Track? The Most Overlooked Factor
Two ETFs can both be called 'emerging markets' funds but track completely different indices with completely different compositions. Always check what index the ETF tracks and what the top holdings are. A JSE Top 40 ETF holds the 40 largest JSE-listed companies by market cap — heavily weighted towards Naspers/Prosus, BHP, Anglo American, and the big banks. A different 'SA equity' fund might include smaller companies or apply different weighting methods.
For global exposure, check the index's regional allocation. An MSCI World ETF is approximately 70% US equities — so you're effectively getting a heavily US-weighted fund, not balanced global exposure. An MSCI All Country World (ACWI) includes emerging markets. Neither is wrong — but they're different products and you should know what you're buying.
Popular South African ETFs Compared
| ETF | Index Tracked | TER | Exposure | Good For |
|---|---|---|---|---|
| Satrix Top 40 | JSE Top 40 | ~0.10% | SA large caps | Core SA holding, lowest cost |
| Satrix MSCI World | MSCI World | ~0.35% | Global developed markets | Rand hedge, international diversification |
| CoreShares S&P 500 | S&P 500 | ~0.20% | US large caps | US market exposure, USD denominated |
| Sygnia FAANG Plus | Top US tech companies | ~0.45% | US technology focus | High-growth tech exposure, higher risk |
| Satrix Property | SA Listed Property Index | ~0.15% | SA REITs | Property exposure without buying property |
| 1nvest Gold ETF | Gold price | ~0.40% | Physical gold | Inflation hedge, low correlation to equities |
⚠️ Past performance figures on ETF marketing materials show the index return, not the after-fee return. Always ask: what would I have actually received after TER? A fund showing 12% annual return with a 1.5% TER actually delivered 10.5% to investors. The gap compounds over time.
TFSA vs Regular Account: Where to Hold Your ETFs
South Africa's Tax-Free Savings Account (TFSA) is the most powerful ETF account available to individual investors. All dividends, interest, and capital gains inside a TFSA are permanently tax-free. The 2026 annual contribution limit is R46,000 with a R500,000 lifetime cap.
For most investors, the order of priority should be: fill your TFSA with broad low-cost ETFs first (up to R46,000/year), then invest additional amounts in a regular taxable brokerage account. EasyEquities offers both account types — you can run a TFSA and a regular account simultaneously on the same platform.
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The TER is the annual cost of owning an ETF expressed as a percentage of your investment. It includes the fund manager's fee, administration costs, and other expenses. A TER of 0.2% on a R100,000 investment costs R200/year. A TER of 1.5% costs R1,500/year. Over 20 years the difference in terminal value is enormous due to fee compounding.
Tracking error measures how closely an ETF replicates its benchmark index. A tracking error of 0.1% means the ETF's return was 0.1% different from the index it tracks. Lower tracking error is generally better. High tracking error suggests the fund is not efficiently replicating the index, which can mean extra costs or delays in buying and selling underlying shares.
EasyEquities is the most popular and has low brokerage fees (0.25% per trade, capped at R45). Satrix offers some of SA's lowest TER ETFs. FNB's Share Investing and Standard Bank's online share trading also offer ETF access. For index funds specifically, compare the TER directly — the difference between 0.15% and 1.5% TER is the most important cost factor over the long term.
Both pool investor money into a diversified portfolio. ETFs trade on the JSE like shares — you buy and sell at live market prices through a stockbroker or platform. Unit trusts are priced once daily by the fund manager. ETFs generally have lower fees (TER) and more transparency. Unit trusts offer automatic reinvestment and some have rand-cost averaging features.
An index-tracking ETF aims to replicate the performance of a specific index — like the JSE Top 40 (the 40 largest companies on the JSE), the S&P 500, or the MSCI World. It buys the same shares in the same proportions as the index, rather than trying to beat the market through active stock picking. Most passive ETFs track an index.
Most financial advisers recommend a blend. SA-only ETFs (like the Satrix Top 40) give you rand-denominated exposure to SA's largest companies. Global ETFs (like the Satrix MSCI World ETF or Sygnia FAANG) give you USD-denominated exposure to international markets, which also acts as a rand hedge. Given SA's historical rand weakness, global exposure has historically outperformed pure SA exposure over long periods.
EasyEquities is the most beginner-friendly — you can open an account in 10 minutes online, with as little as R5. Choose a regular brokerage account for flexibility, or a TFSA account on EasyEquities for tax-free growth (up to R46,000/year contribution limit). You then buy ETFs like you'd buy shares, selecting from JSE-listed funds.
A distribution ETF pays dividends out to investors in cash. An accumulation ETF automatically reinvests dividends back into the fund, increasing the unit price instead. For long-term investors who want compound growth, accumulation ETFs are generally preferred as dividends are reinvested without you needing to act. For income investors, distribution ETFs provide regular cash payouts.
Related Reading
→ How to Start Investing in South Africa→ TFSA South Africa: The Complete 2026 Guide→ Compound Interest Explained: Why Fees Matter→ Retirement Savings SA: Are You on Track?→ How Much Should You Have Saved by Age?→ Two-Pot Retirement SA 2026: Full Guide