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Definition

These are share in the financials sector of the JSE. They are mainly involved in banking, asset management or insurance. Financial companies are inherently service companies offering a service for a regular fee. As such they are among the least risky investments on the JSE, mainly because they don't carry much working capital. They are, however, subject to disruptions due to changing technologies. Thus, for example, Tymebank is disrupting the banking market by offering a banking service without branches where a customer can open an account online and conduct all his business at an ATM. Insurance companies too have had to adapt to online sales of insurance products. The advantage that these companies have from an investment perspective is that they generate most of their income in annuity form - so they are more-or-less guaranteed to have their overheads covered before the month begins.

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