Hayden Reinders, Head of Business Development, Prescient Fund Services

We are in the midst of an ETF revolution in South Africa. The ETF structure is giving active asset managers the ability to not just distribute their funds across traditional platforms but also directly on trading platforms within share portfolios.

A question worth asking, however, is whether this will lead to a new wave of distribution. One of the most common things we hear in the market is that people expect ETFs to be cheaper. However, there is not always a recognition of what the fee should be compared to. This is particularly because it is not just about the price of the product, but the ability it gives you to increase market access and reach.

In my discussions with market participants about actively managed ETFs (AMETFs) over the past two years, certain questions keep coming up. I would like to unpack some of these, share my experience around the current perception of ETFs and where I believe we are going based on my daily interaction with asset managers and other industry stakeholders.

Firstly, AMETFs are not a new concept. They are merely an established idea in a new distribution mechanism. Put simply, an AMETF is the same pooled collective investment portfolio that investors already know and trust, managed by asset managers within set investment parameters, delivered through a listed wrapper. The AMETF wrapper simply provides a different means of distribution.

Why it’s attractive

For asset managers thinking about how they could take advantage of this opportunity, there are some important considerations to take into account:

•  Investors can purchase an AMETF as easily as buying a share. It is listed on an exchange and traded in the same way as any listed security.
•  Since AMETFs are tradable intraday, investment portfolios can react in real time to market changes, movements and macro events.
•  Advisers can use AMETFs in basket portfolios to manage risk and adjust portfolios to meet the risk profiles of their clients. Advisers with risk metrics and monitoring tools can make instant adjustments simply by buying or selling securities. This can be more efficient than switching investments on a Linked Investment Service Provider (LISP).
•  AMETFs can house different kinds of strategies, and can also be offered by banks and derivative providers in offering bespoke solutions blended for enhanced structured products.
•  Foreign active ETFs can now register to be marketed under section 65 of the Collective Investment Schemes Control Act and list as AMETFs (inward listed onto exchanges like the JSE). This allows for direct distribution, saving costs and effort for investors seeking instant, direct access without the need for local feeder fund structures or having to send money offshore.

The world is trading directly and in real time. AMETFs enable the unit trust world to stay current and relevant. Just as asset managers can now make trading decisions from anywhere, the financial adviser of the future will do the same – using this new product set to make real-time portfolio decisions with clients. Europe provides an interesting case study highlighting what we are likely to see in South Africa too. There has been an explosion of ETF role-players, stakeholders, issuers, providers and AMETF products coming to market. Looking at the recent “2025 European ETF Market Landscape Report” by EY Ireland, published in 2025:

•  AUM in ETFs has surpassed $3 trillion, driven by $390 billion in net inflows over the last year and strong market performance. (EY Ireland, 2025)
•  The region has recorded 39 consecutive months of inflows. (EY Ireland, 2025)
•  Investors used ETFs to navigate volatility rather than to exit markets.
•  One in four new European exchange traded products launched is now actively managed.
•  The TER that investors are prepared to pay seems to be increasing, possibly because of more AMETFs coming to market.
•  And importantly, for this discussion, EY projects growing retail participation across markets and investment fund types.

Where to from here?

While we have seen significant growth at Prescient Fund Services and other ETF providers, the universe in South Africa is still relatively small.

At the moment, this means investors have limited options, and this lack of options limits the market’s ability to showcase this story. However, the converse is also true: the more growth we see, the more evident the use cases will be.

The traditional investment platforms are now starting to realise that there is a risk in excluding ETFs. They are working on adding these products to their offering, and this will naturally create more of a market for the end investor.

A final question we are often asked is whether we will be introducing more alternative strategies in ETFs, such as listed hedge funds. We believe this is coming. The European market is demonstrating that if you get the basics right first, then more listing options within countries can also open up and growing awareness will allow for a wider range of options.

For asset managers, the opportunity is clear: if you want to distribute a fund more directly, across more markets and in real time, listing an AMETF offers a way to rethink distribution. Given global trends, South Africa won’t be far behind in taking up this opportunity.

The report is also available here: Prescient ETF Evolution Report 2026

ENDS