Morgan & Co to list multi-sector ETF

SECURITIES firm, Morgan & Co, is set to establish a multi-sector exchange traded fund (ETF) that will be listed on the Zimbabwe Stock Exchange (ZSE) by way of introduction early next year.

Morgan & Co in a statement said the ZSE has already granted approval for the listing of the multi-sector ETF, which will list on January 3, 2022.

According to the company, an actively managed ETF is a form of exchange-traded fund that has a manager or team making decisions on the underlying portfolio allocation instead of tracking the performance of a benchmark index.

“. . . wishes to establish Zimbabwe’s first actively managed ETF, which will invest primarily in banks, real estate related firms, insurance and reinsurance companies, industrial and non-industrial companies and financial holdings companies,” reads part of the statement.

The company said it is now in the process of procuring an initial seed capital in the form of scrip.

“Since this is an actively managed fund, the weights and counters will inevitably be changed over time,” said Morgan & Co.

“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 and add to the portfolio,” said Morgan & Co.

It noted that investors who wish to invest in the fund can do so through two ways, by buying units in the ETF through any registered broker or alternatively by delivering a basket of stocks through an authorised participant in the prevailing weight of the fund.

According to the statement, all assets of the fund will be held by CABS Custodial Services who will act as a Custodian of the fund.

Settlement of trades in the units will be done through the ZSE Depository.

“This investment offers investors an opportunity to own a mixture of underlying stocks through one investment in the ETF.

“Therefore, the investor does not have any additional tasks or costs over and above those associated with dealing in any other publicly traded security and the fund manager will be responsible for adjusting or maintaining the components of the portfolio. The ETF will be reviewed constantly because it will be actively managed,” reads part of the statement.

ETFs are baskets of different types of investments such as stocks, commodities and bonds that are pooled into a single entity, which then offers shares to investors that are subsequently traded on major stock exchanges.

The Old Mutual Zimbabwe Stock Exchange Top Ten Index Exchange Traded Fund (ETF) that was listed on the local bourse in January 2021 became the first ETF to be listed.

The ETF industry globally ended 2020 with over US$ 5,5 trillion investments, according to Investment Company Institute statistics.

According to the ZSE prospective Exchange Traded Product issuers will have to prove that the underlying asset or security tracked is sufficiently liquid to satisfy the exchange such that there will be proper price formation in the product.

Meanwhile, the Government has thrown its weight behind 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 told a business conference early in the year.