The Zimbabwe Stock Exchange (ZSE) says it will this month conduct an Exchange Traded Funds (ETFs) training in Harare to appraise key stakeholders on fundamentals of the new instrument.
The ETFs training will be attended by investment advisors, dealers, research analysts, stockbrokers, fund managers, investors and interested individuals.
An ETF contains an assortment of stocks; a basket tracking an index. These could be indexes made up of related stocks such as mining, agriculture, technology among others.
The new product is in line with the vision of ZSE chief executive Justin Bgoni, who promised a “threefold mandate” to promote investments in the capital markets.
The threefold mandate entails getting fundamentals right through regulatory processes and supporting activities, improving relationships with stakeholders, and growing the exchange in terms of new products, listings, investors and expanding ZSE’s reach and influence.
In emailed responses, Bgoni said: “We are set to launch the Exchange Traded Funds (ETFs) as part of our efforts to offer investors wide investment choices. It is to this end that we deemed it necessary to offer training to stakeholders.
The training will introduce stakeholders to the fundamentals of ETFs, with the aim to ensure that delegates understand the basics of ETFs, the risks and benefits associated with ETFs and most importantly, how they will be traded on the exchange.
We have noticed that it is not enough to launch new products without explaining clearly to the investing public what the benefits are and how they can get involved.’’
The ETFs are growing in popularity and this is evidenced by their uptake in other jurisdictions, which include Johannesburg Stock Exchange (JSE), Nigeria Stock Exchange(NSE) and Nairobi Securities Exchange (NSE).
The global ETF industry has enjoyed rapid growth, now controlling a massive $5,8 trillion in assets under management (AUM). In 2018, the net new money flowing into ETFs was up by 9 percent from the prior year.
“We envision a positive uptake of ETFs in the market due to the benefits associated with this investment and as more issuers come on board, they will be free to list different ETFs themes. We hope to start with ETFs that are based on shares traded on ZSE.
“We hope to launch those this year. These can be based on various investment strategies such as Top 10, Exporters. On top of that, you can have some based on gold and platinum’’, said Bgoni.
The ZSE continuously engages with investors and indications are that they require alternative investment options to the traditional stock.
The ETFs will increase the number of available investment options for the investment community and will also allow investors to get exposure to asset classes that are difficult to access directly for example commodities.
Retail investors will also benefit from ETFs through the breaking down of large investments into smaller units that can then be bought and sold in the secondary market.
One of the advantages of ETFs is that they tend to be cheaper to invest whilst at the same time providing diversification and liquidity.
Low costs allow quicker build-up of wealth.
In addition, ETFs expose many people to the investing strategies that are usually only available to richer people.