Old Mutual EFT gains traction
LIVINGSTONE MARUFU
The value of the Old Mutual Zimbabwe Stock Exchange (ZSE) Top 10 Index Exchange Traded Fund (ETF) has gained by nearly 800% on the back of increased participation by retail investors, Business Times can report.
On the first day of trading, the ETF had a market capitalisation of ZWL$80.176m. The market capitalisation was ZWL$717 149 583.32 on Tuesday reflecting a 794% increase.
The price of the ETF also gained 399% in 11 months to ZWL$4.99 on Tuesday this week from the opening listing price of ZWL$1, on January 4, 2021.
ZSE chief executive officer Justin Bgoni said the introduction of the ETF to the market has resulted in increased participation, especially from retail investors.
“The increase in retail participation can also be attributed to the addition of channels like ZSE Direct which has assisted retail investors with easier access to the stock market,” Bgoni said.
The ETF offers exposure to ZSE Top 10 counters whose numbers in the last 314 days also hit historical high levels.
The stocks have been bullish, with total market capitalisation breaching the ZWL$1.5 trillion mark this week.
This gives an investor an opportunity to own 10 underlying stocks in one investment in the ETF.
Zimbabwe became the fifth country on the continent to trade the ETF after South Africa, Nigeria, Kenya and Egypt in trading the ETF.
The ETF, whose fund manager is Old Mutual Investment Group, is some form of a derivative because it derives its value from underlying assets.
ETFs can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types.
Old Mutual has said the investor will not have any additional tasks or costs over and above those associated with dealing in any other publicly traded security.
The fund manager will be responsible for periodically replicating the ZSE Top Ten index in line with the index ground rules.
Bgoni a number of retail investors have shown an interest in the bourse on the back of the simplified processes to buy securities.
“In October 2020 the number of trades from retail investors stood at 1512 compared to 8435 in October 2021, which is a 458% increase,” he said.
He said the ZSE remains a viable option as the best preserver of value both against inflation and exchange rate losses.
“With the good rains we received earlier this year, led to a great agriculture season and better returns on ZSE. Throughout the year, we witnessed the decline in inflation and the Zimbabwe dollar remained stable resulting in significant growth in the participation of investors on the bourse,” Bgoni said.
