ETFs drive retail trading
LIVINGSTONE MARUFU
The Old Mutual Zimbabwe’s Top 10 Exchange Traded Funds (ETF) spurred retail trading on the Zimbabwe Stock Exchange (ZSE) with the number of units growing by more than half to 131.3m, Business Times can report.
ETFs trading began in January and has improved liquidity and diversification of offerings at the local bourse which had been composed of local equities only.
ZSE chief executive officer Justin Bgoni told Business Times that ETFs have gained ground since their introduction and continue to do well.
“During the beginning of this year we had our first ETFs listing. The ETFs launched with 80m units and to date there are 131 396 526 units, with a year to date gain of the units of 64.25%. The ETF price gained by 76.78% from January 1 to date, with a current market cap of ZWL$232 282 778.66,” Bgoni said.
Zimbabwe has joined other four bourses in Africa -South Africa, Nigeria, Kenya and Egypt- to trade the instrument.
Bgoni said the addition of the ETF to the market has resulted in increased participation especially from retail investors.
“Since the launch of the ETF, we have noticed a growth in the number of trades, value and volume from the retail investors. The total volume traded is 53 357 027 and the number of trades is 1 520,” Bgoni said.
Old Mutual put the initial seed capital in the form of scrip in the exact weights of the top 10 index.
The ETFs track the ZSE Top 10 counters, which are defined from time to time by the ZSE, which reviews the counters once a quarter.
The ZSE, Top 10 counters at the end of April were Innscor Africa, Delta, Econet Wireless, Ok Zimbabwe, Meikles, Cassava, National Foods, Padenga, Simbisa and Zimre Holdings Limited.
This means the investors are offered the opportunity to own the 10 underlying stocks through one investment in the ETFs.
Investors who wish to invest in the fund can do so through two ways, by buying units in the ETFs through any registered stockbroker or alternatively investing in kind by delivering a basket of stocks in the exact weights of the fund through an authorised participant.
The fund manager, Old Mutual Investment Group Zimbabwe, is responsible for periodically replicating the ZSE Top 10 index in line with the index ground rules.
