Niki Giles, Head of Strategy, Prescient Fund Services
South African retail investors are warming to ETFs faster than at any point in our market’s history. However, the base is still small and how we close that gap is the real opportunity for issuers.
Retail was almost invisible on the JSE before the pandemic, with private investors making up only about 3% of trading volumes before 2020. That share has grown meaningfully, driven largely by the introduction of actively managed ETFs (AMETFs) and a new generation of trading platforms that stripped out minimum investments and jargon. The local market has grown with it: the SA exchange-traded product market, which includes ETNs and AMCs alongside ETFs, reached almost R295 billion by the end of 2025, up around 31% for the year.
The demand is real, but the scale is not: South Africa remains predominantly institutionally driven. Retail is catching up, but we’re nowhere near a market like the US, where ETFs are embedded in everyday retirement savings. We’re also arguably still behind Europe where ETF savings plans are growing fast.
We asked some industry professionals which investor segment they thought was driving the current ETF growth in South Africa.
The answer was clear: the majority named retail investors, with IFAs and wealth managers a distant second and institutional channels barely registering. The sample may be small, but the signal sits comfortably with what we see in the market – institutions still hold the assets, while retail is setting the pace of growth. It also places the adviser channel squarely in the middle of the story – seen as the second-largest driver today but held back by the platform and settlement frictions discussed further below.
How retail investors access ETFs
There are two main routes for retail investors to access ETFs. The first is through a traditional stockbroking account, buying ETFs directly on the JSE. The second – and the one doing the heavy lifting – is using investment platforms and apps like EasyEquities and SatrixNOW. EasyEquities hosts over a million accounts and lets clients invest from as little as R5 through fractional shares. SatrixNOW opens the door from R10. Those low entry points have drawn in many first-time investors.
ETFs are also increasingly available inside tax-friendly wrappers (tax-free savings accounts and retirement annuities on platforms like ETFSA), pairing the tax efficiency of the wrapper with the low cost of the ETF.
The opportunity gap remains on the advised side. LISP platform access remains limited. ETFs are mostly available via share portfolios on LISPs, but not yet in most of the fund-of-funds or model portfolios that advisers use. This holds back adviser-driven distribution. However, most LISPs are now building some form of access, working through different trading models to solve the fractional-share problem.
What’s coming to market?
The product shelf is widening, and is starting to look familiar to anyone used to unit trusts. We’re seeing income funds with regular distribution cycles, balanced and Regulation 28-compliant offerings, and a broader spread of asset classes, much of it offshore-focused. More of the “household name” managers that the industry associates with CIS and LISP platforms are now launching ETFs.
AMETFs are a big part of this trend. New categories have moved well beyond equities. We are seeing listings of multi-asset income funds, inflation-beating strategies (CPI +3%, +5% and +7%), global fixed income and even AI-themed funds. Globally, more than half of 2025’s ETF launches were active, and BlackRock has estimated that global active ETF assets are expected to reach around US$4.2 trillion by 2030. South Africa is tracking that trend, just from a smaller base, which raises a fair question for the industry: who are AMETFs really intended for in this market – retail, advisers or institutions? Increasingly, the answer looks like all three.
We also asked some industry professionals who they thought AMETFs were best suited to, and here the answer was far less clear-cut. Advisers and model portfolios came out marginally ahead, with retail investors close behind and institutions some way back. No single segment commanded a majority, which supports the view that AMETFs are not a product built for one audience. The split is also telling in itself: the adviser channel clearly sees the opportunity, even where the platform infrastructure has yet to catch up.
Why retail is buying
The drivers for retail adoption are consistent: low cost and fee transparency, easy access and intraday liquidity, and diversification in a single trade. For AMETFs specifically, investors want the chance of alpha with ETF efficiency, plus the real-time pricing and transparency they don’t always get from a unit trust. Add the macro backdrop (the desire for offshore exposure and currency hedging, and an appetite for flexible allocation), and the appeal is clear.
What’s holding it back?
At the same time, three barriers stand out. First, adviser hesitance is structural, not just out of habit. Many IFAs still default to unit trusts. They know the product, while the platform plumbing and fee structures favour it, and ETFs don’t generate the same trail commissions. Second, the JSE’s T+3 settlement cycle (versus T+1 in the US, with the EU and UK both committed to T+1 by October 2027) creates real friction when advisers try to manage ETFs alongside unit trusts in a blended portfolio. Third, education remains the big challenge: our 2025 Prescient ETF Evolution Report put the knowledge gap at the centre of the challenge, with investors and even some advisers still conflating ETFs with unit trusts or misreading the AMETF structure.
What needs to happen?
Two structural changes come to mind to improve uptake: moving toward T+1 settlement, and broader LISP integration. Together they would let advisers, DFMs and fund-of-funds use ETFs as freely as unit trusts and build genuinely blended portfolios of unit trusts and ETFs. Beyond that, the levers most likely to have an impact are deeper investor and adviser education, continued product innovation, more inward listings of global ETFs on the JSE, and ongoing platform competition to push costs lower still.
One significant underlying driver is generational. Millennial and Gen Z investors are digital-first, cost-conscious and entirely comfortable investing from an app. They are the natural ETF audience. As the great intergenerational wealth transfer plays out over the coming decades, we would expect flows to tilt structurally toward ETFs.
Finally, we asked the industry professionals where they saw AMETFs in five years’ time. Not one respondent expected them to still be on the fringe: a plurality said AMETFs would be a core allocation held alongside passive ETFs and unit trusts, with the balance split between a growing satellite allocation and specialist use for select strategies. Only one respondent thought adoption would still hinge on education and platform support, and nobody was unsure. That is a striking level of conviction for a product set this young, and it puts the onus back on the industry: the market has already decided AMETFs belong in the core, so the work now is making the platform and settlement infrastructure keep up.
ENDS
