FTSE/JSE Top 40 Index Long-Term Returns

13 Pages Posted: 8 Jun 2017

See all articles by Antonie Kotze

Antonie Kotze

Financial Chaos Theory; Department of Finance and Investment Management

Date Written: May 31, 2017

Abstract

The FTSE/JSE Top 40 Index is the flagship index at the Johannesburg Stock Exchange (JSE). It captures more than 80% of the total market capitalisation of all the shares listed on the JSE. It is tradable and the liquid ALSI future is listed on this index. A superficial view of the long-term return of this index points to massive returns. Over a 22 year period, the index grew by 900%. Investors are celebrating. However, should investors be rejoicing? A deeper look demonstrates that returns in local currency terms are not what they seem when compared to returns in hard currencies. The index in terms of gold is a good indicator of the growth in the Gross Domestic Product of South Africa. Investors should keep this in mind when investing in South Africa.

Keywords: Capital Markets, Tradable Index, Return distributions, ALSI, JSE, Top 40 index, Gold, USD, GDP

JEL Classification: C10, G01, G10, G11, G12, G15, G24

Suggested Citation

Kotze, Antonie, FTSE/JSE Top 40 Index Long-Term Returns (May 31, 2017). Available at SSRN: https://ssrn.com/abstract=2978093 or http://dx.doi.org/10.2139/ssrn.2978093

Antonie Kotze (Contact Author)

Financial Chaos Theory ( email )

PO Box 16185
Doornfontein, 2028
South Africa

HOME PAGE: http://www.quantonline.co.za/

Department of Finance and Investment Management ( email )

PO Box 524
Auckland Park
Johannesburg, Gauteng 2006
South Africa

HOME PAGE: http://www.uj.ac.za

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