South Africans are rethinking unit trusts …

Actively managed exchange-traded funds (ETFs) are rapidly outpacing traditional unit trusts on EasyEquities, the low-cost online investment platform owned by Purple Group, as investors look for more flexibility, transparency, and ease of access to their portfolios.

At the 2025 ETF Industry Conference in Cape Town on Tuesday, Nicola Comninos, group chief investment and risk officer at Purple Group, said one in 10 of every active EasyEquities client holds an actively managed ETF.

“We see about 5 000 new investments in active ETFs every month,” she says.

EasyEquities now counts more than two million registered users and over one million active accounts, with ETFs making up about 40% of total transaction volumes on the platform.

Comninos notes that even though actively managed ETFs are relatively new, the purchases of these products have outpaced unit trust purchases by 30%.

“Why are actively managed ETFS such wonderful products? It’s because, in South Africa, our asset managers can outperform the market and deliver superior returns.”

Transparency and control are two important considerations for investors. Because ETFs and actively managed ETFs are listed, they fall under the oversight of both the JSE and the Financial Sector Conduct Authority (FSCA).

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On the rise

In South Africa, the JSE amended its listings requirements in 2022 to allow for actively managed ETFs.

The first such funds were listed in May 2023, and the market has expanded significantly since then.

According to the Prescient ETF Evolution Report, there are around 29 actively managed ETFs on the JSE. Prescient attributes this growth to a combination of investor demand for cost-effective diversification, technological innovation, and the entry of established active managers into the ETF space.

“When Coronation – one of South Africa’s largest active investment managers – embraced the ETF structure as a fund wrapper, it prompted other active investment managers to take notice,” says Ben Meyer, managing director at Prescient Capital Markets.

He expects at least 25 new actively managed ETFs to list in the coming year.

The Prescient report highlights that ETFs have democratised access to investments.

“Unlike traditional unit trusts, ETFs listed on the JSE have a single fee class. This means every investor – whether allocating R100 via a mobile app or R10 million on behalf of a pension fund – has the same total expense ratio (TER) … [which] promotes fairness and transparency, removing barriers that have historically prejudiced smaller investors,” it says.

Platforms like EasyEquities and SatrixNOW are driving this inclusion by giving retail investors direct access to the JSE from their phones.

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From passive to active

Kim Gibb, CEO of Prescient Management Company, says that while ETFs in South Africa have historically been synonymous with index-tracking investing, this is no longer the case.

“The emergence of actively managed ETFs has expanded the toolkit available to investors who want more than just to track the market, but to navigate it strategically,” she notes.

Comninos agreed, adding that South Africa has an “exceptional opportunity” to take its “world class” asset managers to the global stage through actively managed ETFs.

She quotes Purple Group CEO Charles Savage, who predicted some time ago that “active ETFs” would disrupt the industry.

Prescient’s Gibb cautions, though, that although index-tracking ETFs are generally lower-cost, actively-managed ETFs are not automatically cheaper than traditional active funds.

They involve research, oversight, and active management, which can result in fees similar to those of unit trust structures.

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Room for growth

During her presentation at the conference, Comninos shared several statistics illustrating the global and local growth potential of the ETF and actively managed ETF markets:

• The global unit trust market has US$147 trillion (R2 563 trillion) in assets under management (AuM);
• The global ETF market has US$18 trillion (R314 trillion) AuM – around 12% of global unit trusts;
• The global actively managed ETF market has US$1.5 trillion (R26.17 trillion) AuM – 8% of ETFs and 1% of global unit trusts;
• South Africa’s collective investment scheme (CIS) market totals R4 trillion AuM;
• The JSE ETF market holds R250 billion AuM – 6% of the CIS market; and
• The JSE actively managed ETF market stands at R15.6 billion AuM – 6% of the ETF market and 0.4% of the CIS market.

Comninos says this shows there is “massive room for growth” in the South African actively managed ETF space, adding that the local market could even outpace developed markets because “there are more opportunities to outperform the market here”.

This article was republished from Moneyweb. Read the original here.