In Zimbabwe, investment in Exchange Traded Funds (ETFs) is growing rapidly and various ETFs of different types are emerging. Investing in an ETF is easy, but before you invest, make sure you choose the one that best suits your financial plan.
Investing in ETFs or exchange-traded funds is equivalent to investing directly in all the components that are part of an index.
According to Forbes, the yields or returns generated by ETFs replicate the benchmark index. It gives investors the opportunity to benefit from the diversity, flexibility and growth opportunities that come from exchange-traded ETFs.
- An exchange-traded fund (ETF) is a tradable security that tracks an index, sector, commodity, or other asset that can be bought or sold on an exchange in the same way as a common stock.
- Zimbabwe has become the fifth country in Africa to list an ETF, with South Africa, Nigeria, Kenya and Egypt also currently trading the instrument.
Zimbabwe has become the fifth country in Africa to list an ETF, with South Africa, Nigeria, Kenya and Egypt also currently trading the instrument.
Here is the list of Exchange Traded Funds (ETFs) on the Zimbabwe Stock Exchange (ZSE):
Old Mutual Zimbabwe ZSE Top 10 ETFs
Pan-African financial services group Old Mutual has launched the Old Mutual Zimbabwe ZSE Top 10 ETF.
The fund tracks the ZSE Top 10 Index, which consists of the ten largest companies, ranked by investable market capitalization, listed on ZSE. CABS Custodial Services is the custodian of the fund, while Stanbic Bank is the trustee.
The constituents reflect the ZSE Top Ten Index, independently calculated and managed by the Zimbabwe Stock Exchange. ETF rebalancing is done quarterly.
With so few constituents, the fund is understandably highly concentrated, with the two largest companies, beverage maker Delta Corporation and telecommunications giant Econet Wireless Zimbabwe – accounting for weights of 25.03% and 23.47%, respectively. . The other largest stocks in the fund are Innscor Africa (12.84%), EcoCash Holdings (9.97%) and financial services conglomerate CBZ Holdings (4.97%).
Morgan & Co Multi-Sector ETF
The Morgan & Co Multi-Sector ETF is Zimbabwe’s first actively managed exchange-traded fund. According to the Morgan & Co website, the Morgan & Co Multi-Sector ETF is an actively managed ETF with the aim of beating the ZSE All Share while benefiting from a low cost structure. The ETF aims to generate alpha for investors by taking long positions in fundamentally undervalued sectors. The ETF is benchmarked against the ZSE All Share Index.
As we can see from the image, the constituents of the MCMSETF are FINSEC-listed Old Mutual Zimbabwe Limited, NMBZ Bank, First Mutual Holdings Limited, First Capital Bank, Zimre Holdings limited and financial services conglomerate CBZ Holdings. Initially, the focus is on the financial and banking sectors.
Morgan & Co ETF made in Zimbabwe
The Morgan & Co Made In Zimbabwe ETF is an actively managed fund that invests primarily in Zimbabwean manufacturing companies. Normally, at least 80% of the fund will be invested in Zimbabwe-based manufacturing companies whose revenues are derived primarily from manufacturing processes, while 20% may be invested in companies that fall outside this scope. Zimnat Asset Management’s manager primarily allocates the fund’s portfolio investments using a proprietary model developed by Morgan & Co.
Morgan & Co’s Made in Zimbabwe ETF has 10 stocks for manufacturing companies of varying weights. These are: Amalgamated Regional Trading (40.18%), Nampak Zimbabwe (18.48%), Hippo Valley (14.71%), Delta Corporation (417.85%), StarAfrica (3.75%) , British American Tobacco (2.42%). ), Innscor Africa (1.34) and Lafarge Cement (0.56%).
Datvest Modified Consumer Core ETF
The Datvest Modified Consumer Staples Exchange Traded Tracks the Performance of the Zimbabwe Stock Exchange consumer staples listed companies.
According to a prospectus statement for the Datvest ETF, CBZ Asset Management has initial seed capital in the form of certificates in the exact weightings of the Staples ZSE Modified Consumer Index.
The term basic consumer goods refers to a set of essential products used by consumers. This category includes things like food and drink, household items and hygiene products as well as alcohol and tobacco.
The counters that make up the Datvest ETF come primarily from consumer stocks such as Delta, Innscor, National Foods, Meikles, Simbisa Brands, OK Zimbabwe, TSL, Dairiboard and African Distillers.
Cass Saddle Agriculture ETF
The ETF, which was listed by introductiontook off with a seed capital of $36,199,404 and became the fifth overall title listing on the ZSE this year after its official registration.
Cass Saddle is an agricultural asset management company licensed by the Securities and Exchange Commission of Zimbabwe (SECZim). The asset manager offers institutional fund management, individual wealth management, investment and advisory services.
According to the prospectus, CABS Custodial Services is the custodian of the ETF; thus, it will hold the assets of the fund, while CABS Trustee Services is the trustee.
ZSE Chairperson Caroline Sandura said the agricultural sector is well documented as one of the main pillars of the Zimbabwean economy, contributing an average of 10% to gross domestic product over the past 5 years and a just over $1 billion in export earnings in 2021.
“The agricultural sector also provides up to 60% of the raw materials needed by industry, so it is commendable that Cass Saddle Asset Management has chosen this important sector for its ETF,” she said.
The top 10 counters in the index are National Foods with a weight of 28%, BAT 15%, Tanganda 12%, Hippo Valley 11%, SeedCo 9%, TSL 9%, CFI 8%, Dairibord three percent, Zimplow and Ariston one percent respectively and Cash three percent.
Meanwhile, as of the end of the last trading day on the ZSE, a total of 900,500 shares, corresponding to a market value of ZWL 41,042,437.88, have been traded. The data shows an 83% drop in volume and an 82% drop in revenue. The current market capitalization of the Zimbabwe Stock Exchange is ZWL 1.82 trillion.
The benchmark ZSE All Share Index climbed 1,101.20 (10.46%) points to close at 11,629.65, representing a 1-week gain of 12.1%, a 4-week loss of 17.35%, but an overall year-to-date gain of 7.46 percent.