This new security allows investors to buy a single investment that is hugely diversified over the 40 largest South African listed companies. Satrix 40 is issued by the JSE through a wholly owned subsidiary named Indexco. The joint market makers are Gensec and CorpCapital bank and they issue securities for payment-in-kind against 320 million shares that they have received from institutions.

Satrix 40 is the first exchange traded fund to be listed on the JSE and placed SA ahead of Europe and Australia. In North America, exchange traded funds are the most liquid counters in their respective markets. On the US stock exchanges ?spiders? track the S&P 500 index, ?diamonds? track the Dow Jones industrial average and ?cubes? track the Nasdaq 100 index. Leave it to the Americans to come up with cute names for what are effectively index investment funds.

The attraction of this fund is that you can take a position in the JSE?s largest capitalisation companies and receive their average growth. The advantage of buying this through your stockbroker (instead of through an Index Fund) should generally mean lower trading costs. One Satrix 40 security is priced at 1,000th of the ALSI 40 index so this fund gives you an easy way to gain representation across the most conservative listed investments in SA. In a portfolio of 12 counters, Satrix 40 could be considered as your ?low risk? element.

Predictions are that the Satrix 40 is going to perform better that 80% of the listed shares available because the non performers automatically drop off if their market capitalisation falls below the shares in the top 40. Strong growth companies will automatically be included in the index. This is a good investment for those who are risk averse but would still like to take part in the growth opportunities that the share market offers.