Investors buying the JSE Top40 index, the bourse’s most popular index and a collection of the country’s 40 biggest stocks, are in fact investing in only 12 shares, says CoreShares. The capped Top50, in which the weight of any single stock was limited to 10%, had exposure to only 23 shares, said Gareth Stobie, MD of exchange-traded fund (ETF) provider CoreShares. ETFs trade like stocks on the JSE but track an index, commodity, bonds or a basket of assets. The reason for the concentration is the relative size of a handful of heavyweights. Uncapped, Naspers makes up 23% of the Top40. Luxury goods company Richemont and BHP follow with weightings of 8.73% and 8.08%, respectively. The largest 10 stocks make up 66.1% of the Top40, indicating that the index is not as diversified as the investors who track it might believe. The popularity of index-tracking products, so-called "passives", has soared in recent years, driven by lower fees and better performance relative to most active asset man...
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