The value of the Old Mutual Zimbabwe Stock Exchange (ZSE) Top 10 Index Exchange Traded Fund (ETF) shot up 871% to ZWL$778.47m from ZWL$80.18m on its debut in January last year.
The price of the ETF also gained 442% in the past 12 months to ZWL$5.42 from the opening listing price of ZWL$1 on January 4, 2021.
The Zimbabwe Stock Exchange (ZSE) chief executive officer Justin Bgoni told Business Times that retail investors were instrumental in the movement of the market cap.
“The addition of channels like ZSE Direct has assisted retail investors with easier access to the stock market hence the increased retail participation,” Bgoni said.
Equity ETFs are passive investment instruments that are based on ZSE top 10 counters.
The proceeds of the ZSE Direct client will be credited to one’s ZSE Direct wallet on the same trading day after a successful matched and confirmed sell order.
The stocks have been bullish, with total market capitalisation breaching the ZWL$1.4 trillion mark this week.
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 said a number of retail investors have shown an interest in the bourse on the back of the simplified processes to buy securities.
He said the ZSE remains a viable option as the best preserver of value both against inflation and exchange rate losses.
“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.
He said a client does not have to wait for the settlement cycle of T+3 to receive sale proceeds, an added convenience brought to the retail investor by ZSE.
On January 4, this year, Morgan & Co also listed its ETF on the ZSE, bringing to two the number of ETFs on ZSE.