FAQ Shares vs ETFs – Which One’s Right for You?

One of the most common questions we get from new investors is this: “Should I be buying individual shares, or is it better to invest in an ETF?” The short answer? It depends on your time, goals, and risk appetite.

Firstly– what exactly is an ETF?

An ETF, or Exchange Traded Fund, is a type of investment that pools money from many investors and uses it to buy a basket of underlying assets – usually shares. Instead of buying, say, Naspers, Shoprite, and Anglo American one by one, an ETF lets you buy a single product that holds a basket of shares – in the right weightings.

It trades on the stock exchange just like any other share. So you can buy or sell it throughout the day on platforms like EasyEquities, or through a bank or online broker. The JSE currently lists over 80 ETFs, covering everything from South African equities to offshore tech, government bonds and commodities.

To give you an idea, local favourites include:

• The Satrix 40 ETF, which tracks the JSE’s 40 biggest companies.
• The 1nvest SWIX 40, which adjusts for local shareholding limits.
• The Satrix DIVI ETF, focused on high-dividend-paying stocks.
• The CoreShares Scientific Beta, which uses a smart-beta strategy to diversify by risk factor rather than just size.

And if you want international exposure, you’ve got options like:

• The Satrix MSCI World ETF, covering over 1,500 companies globally.
• The Satrix Nasdaq 100, with top U.S. tech firms like Apple, Microsoft, and Nvidia.
• Or even the 1nvest Gold ETF, which tracks the price of gold in rands.

The newest addition? Crypto ETFs. These are gaining popularity globally, giving investors exposure to digital assets like Bitcoin or Ethereum in a regulated, exchange listed format (the crypto-linked EC10, which trades on the CTX).

So why choose an ETF? What are the pros — and what’s the catch?

The appeal of ETFs is simple: instant diversification and low effort.

You get exposure to dozens or even hundreds of shares in one go. And unlike unit trusts, ETFs generally come with very low fees — many under 0.4% per year — because they’re passively managed and just track an index. You don’t need to research companies or watch the markets every week. You just buy the ETF and let the market do its thing.

Better still, some ETFs trade for under R10 per unit, meaning you can start investing with just a couple hundred rand. That’s a massive advantage for first-time investors who don’t have the cash to build a fully diversified portfolio from scratch.

But of course, nothing is risk-free. And ETFs come with trade-offs too.

You don’t get any control over what’s inside the fund — the holdings, the weightings, or the timing of changes. If a company gets added or removed from the index, the ETF follows suit. So if you’ve got a strong view about a certain stock (maybe you believe in MTN but not Vodacom), you don’t get a say. You’re riding the whole wave, not steering the ship.

And while ETFs spread out your company-specific risk, they don’t shield you from broader market moves. A resource ETF, for example, still depends heavily on commodity prices. If gold or oil crashes, your ETF will likely drop too — even if the individual companies inside it are well-run. In that case, your “diversified” risk is still concentrated in one sector.

Take the Satrix RESI ETF, for instance — it gives you access to major resource stocks like BHP, Anglo American, and Glencore. That’s great for diversifying within mining, but if commodity prices turn south, the whole ETF takes a knock. Similarly, the Satrix Nasdaq 100 ETF will rise and fall with the broader U.S. tech sector, regardless of which company is performing best.

And what about shares? Why bother doing it yourself?

Building your own share portfolio can be incredibly rewarding — both financially and intellectually. You get full control over what you own, when you buy, when you sell, and how much you invest in each idea.

Let’s say you’ve done your homework and you’re bullish on Capitec, Spar, and Aspen. You can invest directly, track the news, and take profits when you feel the time is right. That kind of active involvement can give you more agility — especially when markets get volatile or certain sectors take off.

And of course, there’s the thrill of backing a winner. If you picked Nvidia two years ago, or took a punt on MultiChoice before the Canal+ bid, you’d be smiling. That kind of upside is much harder to achieve with ETFs, which are designed to match the market — not beat it.

But managing your own portfolio takes time and effort. You need to keep up with company results, SENS announcements, economic trends, and global news. You need to make decisions. And you need to be honest with yourself when a stock underperforms — which isn’t always easy.

For many investors, it quickly becomes overwhelming. The risk of emotional decision-making — buying high, selling low — is real. And unless your portfolio is properly diversified (usually 30+ shares across different sectors), you may end up with more risk than you bargained for.

So which one is better — an ETF or shares?

There’s no one-size-fits-all answer here. It really comes down to your time, knowledge, and investment goals.

If you’re just getting started, or you want something consistent and low-maintenance, ETFs are a fantastic starting point. You can invest small amounts regularly, get solid market exposure, and avoid the stress of picking individual winners.

On the other hand, if you enjoy researching stocks, following earnings updates, and thinking about long-term business trends, then building your own share portfolio can offer more flexibility — and potentially better returns, if you get it right.

Of course, you can also combine the two. Many savvy investors use ETFs as a core holding — providing a stable, diversified base — and then add individual shares on top for growth or specific themes.

If you’re unsure where to start, begin with an ETF. It’s cheap, simple, and gives you instant access to the market. And as your knowledge grows, you can explore adding individual shares or more niche ETFs into your portfolio.

The most important thing is to start. You can tweak, test, and build over time.

And if you’re stuck or need guidance? Speak to a licensed broker or adviser. They’ll help match your strategy to your goals — and make sure your portfolio works for you, not the other way around.