Beyond S&P 500 Index Funds: Here's the 1 Sector I'd Buy First as a New Investor
2026-10-11 18:17
•James Brumley •The Motley Fool
•••••• ••••••••••• Axe Cap view
Tech Is Tempting, But Prosus Is the JSE Play to Watch
While the US tech boom dazzles, South African investors should look carefully at Prosus for local tech exposure.
US technology has led the market for decades, with giants like Apple and Google driving innovation and investor returns. Yet South African investors can't access these names directly on the JSE. Prosus, a major shareholder in Tencent, is our best proxy. It offers a way to ride the global tech wave but from a local perspective. Prosus’s shares tend to reflect both the strength of Tencent and rand fluctuations, so USD/ZAR currency moves also matter here. Watch for rand strength; a stronger rand can limit Prosus’s rand-based gains even if Tencent’s USD value rises. The risk? Chinese regulatory threats and global economic jitters could weigh on Tencent, dragging Prosus down. That means this isn’t a set-and-forget bet — monitor both China’s tech climate and rand dynamics closely. For purely local tech funds or counters, options are limited, and traditional sectors remain dominant. this is just our opinion and not financial advice
Buy Prosus selectively, keeping an eye on USD/ZAR and Chinese tech policy. Avoid local tech stocks until we see clearer growth prospects or new listings.
- Prosus
- USD/ZAR
- Chinese regulatory crackdown on Tencent
- Rand volatility impacting Prosus returns
7/10
While S&P 500 index funds remain a solid foundation for investors, the technology sector has consistently outperformed the broader market over the past 30 years with average annual gains of 14.2% versus the market's 10%. The author recommends new investors consider adding technology sector ETFs like VGT, XLK, or IYW to their portfolios alongside diversified index funds, citing tech companies' track record of driving societal innovation through products like smartphones, search engines, and e-commerce platforms.
Our take is based on reporting first published by The Motley Fool.