Satrix style tracker Q3 2020

What worked and what didn’t in Q3 2020?

| 26 November 2020

Factor performance review at a glance

A global resurgence of Covid-19 cases and the threat of a more protracted lockdown continued to sew uncertainty in markets, causing Value to underperform as investors favoured safer alternatives. Locally, Price Momentum (18.4%) showed a high return predictive signal through the quarter, while Earnings Revisions (39.0%) continued to bolster Momentum. Price to Book (-6.4%) and Earnings Yield (-1.0%) trailed during the quarter, in line with the global trend of a flight to safety. Profitability (6.7%) and Leverage (7.4%) showed robust return predictive signals, while Growth (-5.7%) failed to deliver. As the markets calmed in Q3 (compared to the first and second quarter), Low Beta (6.8%) and Low Vol (4.5%) showed improved performance.

Key events that impacted performance in Q3 2020

High levels of uncertainty continued through the third quarter of the year, with an unprecedented contraction in GDP numbers reported globally. The MSCI All World Index (7.9%), MSCI Emerging Markets Index (9.6%) and MSCI USA Index (9.5%) all gave positive returns in net US dollars. Locally, the rand appreciated by 4% to the US dollar, closing at R16.69 to the greenback, R21.65 to the pound and R19.56 to the euro. The South African Reserve Bank (SARB) committee continued to cut the repo rate in July by 0.25% to another record breaking 3.5% level, but decided to hold rates fixed in September despite their downward revision of growth and inflation forecasts.

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Satrix Managers (RF) (Pty) Ltd (Satrix) a registered and approved Manager in Collective Investment Schemes in Securities and an authorised financial services provider in terms of the FAIS. Collective investment schemes are generally medium- to long-term investments. Unit Trusts and ETFs the investor essentially owns a “proportionate share” (in proportion to the participatory interest held in the fund) of the underlying investments held by the fund. With Unit Trusts, the investor holds participatory units issued by the fund while in the case of an ETF, the participatory interest, while issued by the fund, comprises a listed security traded on the stock exchange. ETFs are index tracking funds, registered as a Collective Investment and can be traded by any stockbroker on the stock exchange or via Investment Plans and online trading platforms. ETFs may incur additional costs due to it being listed on the JSE. Past performance is not necessarily a guide to future performance and the value of investments / units may go up or down. A schedule of fees and charges, and maximum commissions are available on the Minimum Disclosure Document or upon request from the Manager. Collective investments are traded at ruling prices and can engage in borrowing and scrip lending. Should the respective portfolio engage in scrip lending, the utility percentage and related counterparties can be viewed on the ETF Minimum Disclosure Document. The Manager does not provide any guarantee either with respect to the capital or the return of a portfolio. The index, the applicable tracking error and the portfolio performance relative to the index can be viewed on the ETF Minimum Disclosure Document and/or on the Satrix website. Performance is based on NAV to NAV calculations of the portfolio. Individual performance may differ to that of the portfolio as a result of initial fees, actual investment date, dividend withholding tax and income reinvestment date. The reinvestment of income is calculated based on actual distributed amount and factors such as payment date and reinvestment date must be considered. If the fund holds assets in foreign countries it could be exposed to the following risks regarding potential constraints on liquidity and the repatriation of funds: macro-economic, political, foreign exchange, tax, settlement and potential limitations on the availability of market information.
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