Come gather 'round people
Wherever you roam
And admit that the benchmarks
Around you have grown
And accept it that soon
You'll be measured to the bone
If your performance to you is worth savin'
And you better start swimmin'
Or you'll sink like a stone
For the benchmarks they are a-changin'
(Paraphrasing Bob Dylan)
The composition of the JSE Capped Swix Index has greatly changed over the last five years. At the beginning of 2020, the index weighting of banks was 12.2%, gold miners 4%, platinum miners 4.3%, diversified miners 7.6%, and Sasol 3.2%. At the time of writing (end April 2025), banks are 19.1% of the index, gold miners 13.4%, platinum miners 3%, diversified miners 5.6% and Sasol 0.6%.
The biggest mover has been the gold miners, with their index weighting more than tripling from 4% to 13.4% (with a peak close to 15% earlier in April). The year-to-date JSE Capped Swix Index return of c.8% was largely due to the move in the gold shares, accounting for 6.2% of the index return (close to 80%). Back in 2020, a benchmark cognisant fund manager could easily be underweight the gold sector, but in 2025, it would be completely irresponsible. Such a fund manager would have lost out on capturing most of the index return. In an environment where there is a large trust deficit between adversaries and allies alike, gold is clearly attracting interest.
Another interesting move has been Sasol, which has dwindled to 0.6% of the JSE Capped Swix Index. There is a real risk that Sasol may fall out of the Top 40 Index by June 2025, which is a first in the memory of the writer’s 23-year career in the markets. A combination of poor investment decisions in the mega-project in Lake Charles, and oil markets that are out of favour has found Sasol with a balance sheet that looks tenuous. Being one of the largest polluters in a world of ESG has also not helped. Time will tell if Sasol can regain its former glory, but for now, it has lost importance in indexes and benchmarks in South Africa.
Looking forward, it might be best to keep the last few lines of Bob Dylan’s song in mind:
The slow one now
Will later be fast
As the present now
Will later be past
The order is rapidly fadin'
And the first one now
Will later be last
For the times they are a-changin'
Benchmark weights of various stocks and sectors will change over time. We are continuously assessing these changes in our endeavour to outperform our benchmarks and create value for our clients.