Business

Major milestone as first ever ETF lists today

Justin Bgoni

Herald Reporter

THE Zimbabwe Stock Exchange (ZSE) says the Old Mutual Zimbabwe ZSE Top 10 Exchange Traded Fund (ETF) launched earlier last month will be listed on the bourse’s main board starting today.

ZSE chief executive officer Mr Justin Bgoni said investors wishing to invest in the exchange’s top 10 stocks security should consult their stockbroker or financial advisor for guidance.

The diversified financial services group, with interests in banking insurance and property sectors, earlier indicated it will provide initial seed capital for the newly introduced publicly traded security.

Old Mutual said it was putting initial seed capital in the form of scrip in the exact weights of the top 10 index stocks listed on the domestic exchange.

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The fund will then be listed on the ZSE by way of introduction. Additional investments from other investors will be used to buy shares on the market to add to the portfolio.

Investors who wish to invest in the fund can do so through two ways, by buying units in the ETF 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, Old Mutual advised

According to Old Mutual, all assets of the ETF will be held by CABS Custodial Services, who will act as custodian for the fund. Stanbic Bank is the fund’s trustee.

An ETF is a type of security that involves a collection of securities that often tracks an underlying index. Old Mutual’s ETF will be based on the bourse’s top 10 Index.

ETFs can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types.

Settlement of trades in the units will be done in electronic format in accordance with the settlement modalities approved by the Zimbabwe Stock Exchange.

This investment offers investors an opportunity to own 10 underlying stocks through one investment in the ETF.

Old Mutual 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.

Currently the Top Ten index is reviewed once a quarter. The ZSE Top 10 Exchange Traded Fund has brought a new dimension to the country’s limited capital markets.

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HERALD