ETFs vs Unit Trusts on the JSE — what the numbers actually show after 10 years

South Africans love debating whether active fund managers can beat the market. The data over the past decade is pretty clear — and it’s not kind to most unit trusts.

The S&P Indices Versus Active (SPIVA) South Africa scorecard

Every year S&P publishes how many South African equity unit trusts beat their benchmark. Over the past 10 years (2014–2023) the average figure is around 85 % of active funds underperformed the index after fees. In some years it was over 90 %.

Why the fee difference matters so much

A typical general equity unit trust charges 1.2–1.8 % per year (plus platform fees and advisor fees). The cheapest JSE-listed ETFs charge 0.17–0.40 %. That 1–1.5 % difference compounds dramatically over decades.

Real example: FTSE/JSE All Share Index vs average general equity unit trust

From the beginning of 2014 to end of 2023:
• ALSI total return (including dividends): +137 %
• Average general equity unit trust: +92 %
The index nearly doubled your money; the average active fund grew it by less than two-thirds.

When active management sometimes works

Small-cap funds and certain specialist managers (Coronation Smaller Companies, Nedgroup Investments Entrepreneur) have managed to outperform — but they are the rare exception, not the rule. Even then, their higher fees eat a large chunk of the outperformance.

The simple takeaway for most investors

Unless you have strong evidence that a particular active manager will continue outperforming after fees (and very few do), low-cost ETFs tracking the ALSI, Top 40, or MSCI World give you market returns at a fraction of the cost. For the vast majority of South Africans, that’s the rational choice.