Satrix Review - Halal Finance Products

The Satrix Shari'ah Top 40 ETF is South Africa's only listed Shariah exchange-traded product and one of the older halal ETFs anywhere: it listed on 6 April 2009 as the NewFunds Shari'ah Top 40 Index ETF in Absa's NewFunds stable, and moved to Satrix, the Sanlam Group's index house and SA's largest ETF provider, on 1 March 2023. The seventeen-year listed history matters because SA's earlier exchange-traded Shariah experiments, notably FNB's Islamic ETNs, were delisted, leaving STXSHA as the lone survivor and the only way to buy Shariah-screened SA equity beta on exchange.

Compliance is delivered by index methodology rather than fund governance. The FTSE/JSE Shari'ah Top 40 Index takes the JSE Top 40 universe and applies screens run by Yasaar Limited, the scholar consultancy retained by FTSE Russell globally: exclusion of conventional financial services, alcohol, non-halal food products, tobacco, weapons and other prohibited activities, plus financial-ratio screens on debt and interest-bearing assets, rebalanced quarterly. The strengths of this model are consistency and transparency (the methodology is published and holdings are visible daily); the weaknesses are the absence of a fund-level scholar board, no purification reporting (investors who purify must estimate non-permissible income themselves) and screening thresholds that differ in places from the AAOIFI standards used by SA's active fund boards.

The portfolio consequence of Shariah-screening the Top 40 is concentration: with banks and insurers excluded, resources and a few large industrials dominate, so the ETF behaves quite differently from broad SA equity and from the more diversified active halal funds. Over some periods this resource tilt has helped substantially, over others it has hurt; investors should treat STXSHA as a concentrated large-cap Shariah factor portfolio rather than a whole-market proxy. Fund size around R220 million (Satrix investor information, July 2026; R233 million per the iTransact fact sheet) is workable for retail flows via market makers, but large single orders should use limits.

The strategic role is clear: at a 0.40% TER (transaction costs 0.08%) against 1.04% to 2.36% for active halal funds, STXSHA is the cost anchor of any SA halal equity allocation, buyable from one unit and eligible for tax-free savings accounts, which no active Shariah unit trust minimum can beat for a new saver. The pragmatic pattern we see across the market is a barbell: STXSHA for cheap core beta, an active manager (most often Camissa on price or Old Mutual Albaraka on assurance) for diversification and the defensive sleeve the ETF cannot provide.