The Satrix Resi ETF (JSE: STXRES) has been making headlines in 2025, delivering exceptional returns that have caught the attention of investors worldwide. This exchange-traded fund, which provides concentrated exposure to South Africa’s resource sector, has become one of the standout performers in the local market. Let’s explore what makes this ETF tick and why it has become such a compelling investment proposition.

Disclaimer: I am not a financial advisor. This information is for educational purposes only and should not be considered as financial advice. Always do your own research and consider seeking advice from a qualified financial professional before making any investment decisions.

Fund Overview

The Satrix Resi ETF, launched on March 15 2006, is managed by Sanlam Investment Management and tracks the FTSE/JSE Capped Resources 10 Index. This index consists of the 10 largest resource companies listed on the Johannesburg Stock Exchange (JSE), ranked by investable market capitalization. A key feature of this index is that each constituent’s weight is capped at 30% during quarterly reviews, ensuring the fund maintains diversification and doesn’t become overly concentrated in any single stock.

The fund provides investors with exposure to companies operating in the resources sector, including mining companies, mining holding companies, and mining finance and exploration companies. It’s designed to replicate the performance of its underlying index while paying out quarterly dividends to investors.

Stellar Performance in 2025

Year-to-Date Returns

The Satrix Resi ETF (STXRES) is up over 70% so far in 2025, making it one of the best-performing ETFs on the JSE. This exceptional performance has been driven primarily by the surge in gold prices 🔥 and the strong performance of gold mining stocks within the portfolio.

Historical Context

STXRES had a total return of 31.76% in the past year, including dividends, though the 2025 performance represents a significant acceleration from previous periods. The fund’s 52-week range spans from 5,400 to 10,102 cents, highlighting the dramatic recovery and growth story.

3-Year Performance

The fund has experienced significant volatility over this period, typical of resource-focused investments. The recent surge in 2025 follows a period where resource stocks were generally undervalued, setting the stage for the current rally.

Top 10 Holdings: A Precious Metals Powerhouse

Based on the available information, the Satrix Resi ETF’s top holdings are concentrated in precious metals mining, with the following companies likely forming the core of the portfolio:

Current Top 10 Holdings (Estimated):

1. AngloGold Ashanti – One of the world’s largest gold producers, recently moved its primary listing to London and New York
2. Gold Fields – Major gold mining company with operations across multiple continents
3. Harmony Gold Mining – South African gold producer with significant operations
4. Sibanye-Stillwater – World’s largest primary producer of platinum and a top-tier gold producer
5. Impala Platinum Holdings – Major platinum group metals producer
6. Anglo American Platinum – Leading platinum producer
7. Anglo American – Diversified mining giant with exposure to various commodities
8. BHP Group – Global mining company with South African operations
9. Northam Platinum – Platinum group metals producer
10. Sasol – Integrated energy and chemicals company (approximately 3% weighting)

Note: The exact current weightings and order may vary as the index is rebalanced quarterly and individual stock performances differ.

Sector Composition

The fund invests in companies that are involved in gold mining (25.9%), platinum & precious metals (22.8%), general mining (40.5%), and chemicals diversified (8.9%). However, Gold miners; Anglogold Ashanti, Goldfields and Harmony are now ±55% of the ETF and all three trade at or just off all-time highs, indicating that the gold exposure has increased significantly due to the strong performance of these stocks in 2025.

Key Investment Drivers

Gold Price Rally

The primary driver of the ETF’s exceptional 2025 performance has been the surge in gold prices. Liberation day tariffs sent the yellow metal to the next level and it has now settled in the $3,200-3,400 range. This represents a substantial increase from previous levels, providing significant tailwinds for gold mining companies.

Operational Leverage

AngloGold Ashanti saw a 93% jump in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) when its average gold price received rose 24%, demonstrating the operational leverage that mining companies enjoy when commodity prices rise. This leverage effect has been a key driver of the ETF’s outsized returns.

Platinum Group Metals Recovery

Adding to the party are now also the PGM miners as the white metals also rallied from the middle of the year and PGM miners are ±25% of the ETF. The recovery in platinum group metals has provided additional support to the fund’s performance.

Dividend Characteristics

The Satrix Resi ETF pays quarterly dividends, with recent payouts showing the benefit of higher commodity prices:

• Recent dividend payments have included R0.06 per share (January 2025), R0.11 per share (July 2025), and R0.58 per share (April 2025)
• Satrix RESI, an ETF focused on South Africa’s resource sector, is up nearly 40% year to date and is paying a dividend more than 150% higher than the same period last year
• The Satrix Resi dividend yield is around ±1.1%

Investment Considerations

Opportunities

• Commodity Price Tailwinds: Continued strength in gold and platinum prices could drive further gains.
• Operational Leverage: Mining companies benefit disproportionately from higher commodity prices.
• Diversification: The capped index structure prevents over-concentration in any single stock.
• Dividend Income: Quarterly distributions provide regular income to investors.

Risks

• Commodity Price Volatility: Resource stocks are highly sensitive to commodity price fluctuations.
• Operational Challenges: Mining companies face ongoing operational and safety challenges.
• Currency Risk: Rand strength could impact the rand-denominated returns of these companies.
• Regulatory Environment: Changes in mining regulations and policies could affect operations.
• High Concentration: Despite capping, the fund remains concentrated in just 10 stocks.

Market Context and Outlook

Gold is settled in its range and I don’t see what kicks it to the next level which would be a breach of $3,500 (USD). But right now gold miners print cash. The current environment of elevated gold prices provides exceptional cash generation opportunities for gold miners, though questions remain about further upside potential.

The current dividend yield of ±1.1% is at the low end of the almost twenty year range with 7% at the top end of the range. So much more dividends and with PGM potentially another driver for another leg higher. This suggests that while current yields are modest due to high share prices, there’s potential for significant dividend growth if commodity prices remain elevated.

Cost Structure

The fund maintains a competitive cost structure typical of Satrix’s index-tracking products. As a passive ETF, it benefits from low turnover and minimal trading costs, making it an efficient way to gain exposure to the South African resource sector.

Conclusion

The Satrix Resi ETF has delivered exceptional returns in 2025, driven by a perfect storm of rising gold prices, platinum group metals recovery, and operational leverage in the mining sector. While the fund offers compelling exposure to South Africa’s resource giants, investors should carefully consider the inherent volatility and concentration risks associated with commodity investments.

For investors seeking targeted exposure to South African resources with the potential for both capital appreciation and dividend income, the Satrix Resi ETF presents an interesting proposition. However, given the cyclical nature of resource stocks and the fund’s concentrated exposure, it’s best suited as part of a diversified portfolio rather than a standalone investment.

The fund’s ability to capitalize on commodity cycles, combined with the professional management of underlying operations by world-class mining companies, makes it a worthy consideration for investors with appropriate risk tolerance and investment timeframes.