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  • August 2020 (Revised December 2020)
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Satrix: Competing in the Passive Asset Management Industry in South Africa

By: Mark Egan, Pippa Tubman Armerding and Dilyana Karadzhova Botha
  • Format:Print
  • | Language:English
  • | Pages:27
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Abstract

In late 2017, Satrix, one of the largest passive asset management firms in South Africa and a pioneer in the industry since 2000, had to decide its strategy going forward in a market where passive asset management had become increasingly commoditized and competitive.

Over the previous three years, as a result of increased competition and changing investor expectations, Satrix had faced increased pressure to reduce its management fees. The total expense ratio (TER) of the Satrix 40, Satrix’s flagship ETF, was 38 basis points (bps), more than double that of many of its new competitors. To maintain the company's position in the industry, Satrix's leaderhip was considering cutting the TER on its flagship ETF by almost 75% from 38 bps to 10 bps. The fee change would dramatically lower Satrix’s margins, but the company's leadership was concerned that Satrix couldn’t afford to not make the change; nearly 10% of assets the company managed came from the Satrix 40. What should they do?

Keywords

Asset Management; Investment Funds; Competition; Competitive Strategy; Financial Services Industry; South Africa; Africa

Citation

Egan, Mark, Pippa Tubman Armerding, and Dilyana Karadzhova Botha. "Satrix: Competing in the Passive Asset Management Industry in South Africa." Harvard Business School Case 221-020, August 2020. (Revised December 2020.)
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About The Author

Mark L. Egan

Finance
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Related Work

    • August 2020 (Revised December 2020)
    • Faculty Research

    Satrix: Competing in the Passive Asset Management Industry in South Africa

    By: Mark Egan, Pippa Tubman Armerding and Dilyana Karadzhova Botha
    • February 2021
    • Faculty Research

    Satrix: Competing in the Passive Asset Management Industry in South Africa

    By: Mark Egan
Related Work
  • Satrix: Competing in the Passive Asset Management Industry in South Africa By: Mark Egan, Pippa Tubman Armerding and Dilyana Karadzhova Botha
  • Satrix: Competing in the Passive Asset Management Industry in South Africa By: Mark Egan
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