SECURITIES firm Morgan & Co Limited is set to introduce a multi-sector exchange-traded fund (ETF), which will be listed on the Zimbabwe Stock Exchange (ZSE) as an introduction early next year.
Morgan & Co said in a statement that ZSE has already approved the listing of the multi-sector ETF, which will be listed on January 3, 2022.
An actively managed ETF is a form of an exchange-traded fund in which a manager or team makes decisions about the allocation of the underlying portfolio instead of tracking the performance of a benchmark.
“… wants to establish Zimbabwe’s first actively managed ETF, which will invest primarily in banks, real estate companies, insurance and reinsurance companies, industrial and non-industrial companies and financial holding companies,” said part of the communicated.
The company said it was now in the process of raising seed money in the form of scrip. “As this is an actively managed fund, the weightings and counters will inevitably change over time,” said Morgan & Co.
“The fund will then be listed on the ZSE as an introduction. Additional investments from other investors will be used to buy shares in the market and add to the portfolio, ”said Morgan & Co.
He said that investors who wish to invest in the fund can do so in two ways, by buying shares of the ETF through any registered broker or by delivering a basket of shares through the intermediary. of an authorized participant in the current weight of the fund.
In addition, the securities firm said all of the fund’s assets will be held by CABS Custodial Services which will act as the fund’s custodian.
The settlement of transactions in the units will be made through the custodian ZSE.
“This investment offers investors the opportunity to own a mix of underlying stocks through an investment in the ETF.
“Therefore, the investor has no additional duties or costs beyond those associated with trading any other listed security and the fund manager will be responsible for adjusting or maintaining the components of the portfolio.
“The ETF will be constantly reviewed because it will be actively managed”, read the press release.
ETFs are baskets of different types of investments such as stocks, commodities and bonds that are grouped into a single entity, which then offers stocks to investors which are then traded on the major stock exchanges.
The Old Mutual Zimbabwe Stock Exchange Top Ten Index Exchange Traded Fund (ETF) which was listed on the ZSE in January 2021 became the first ETF to be listed on the platform.
The ETF industry closed 2020 with more than $ 5.5 trillion in investments, according to statistics from the Investment Company Institute.
According to the ZSE, potential issuers of exchange traded products will need to prove that the underlying asset or track of securities is liquid enough to satisfy the exchange so that there will be appropriate price formation in the product.
Meanwhile, the government, which is desperate for financing solutions in a capital-strapped economy, has put its weight in favor of ETFs.
“There is no reason why we cannot have ETFs to raise capital like they do in Botswana,” Finance and Economic Development Minister Mthuli Ncube said at a conference. business early this year.
Business and government have both struggled to find capital due to the country’s currency crisis, characterized by soaring inflation.