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New ETF aims to boost investment in Africa

Apr 20 2017 17:22
Lameez Omarjee

Johannesburg – A new exchange traded fund (ETF) aims to increase investment growth in Africa.

The ETF provides a diversified investment in 50 companies across the African continent, excluding South Africa. Big50 Ex-SA ETF listed on the JSE on Thursday, it is offered by Cloud Atlas Investing, a Johannesburg-based Collective Investment Scheme.

It operates through 15 African stock exchanges. These include exchanges on Egypt, Mauritius, Kenya, Morocco, Tanzania, Nigeria, Tunisia, Botswana, Namibia, Uganda, Ghana, Zimbabwe and the BRVM Exchange in West Africa.

“This new ETF offers an easy, safe way to invest in African markets and supports the continent’s growth journey,” said Donna Nemer, director of capital markets at the JSE.

“Because the Big50 ex-SA ETF is suitable for individual investors as well as institutional investors, it offers a wider opportunity to participate in Africa’s growth,” said Nemer.  “Because it does not invest primarily in South African investments, it offers local investors rand-hedging opportunities.”

Founding director and CEO of Cloud Atlas Investing, Maurice Madiba explained why the ETF was designed. “We want to improve liquidity and help to develop African markets for investors to feel the full robustness of these markets,” he said. Investment instruments include stocks in multinationals listed on African exchanges and local African companies.

Besides giving individuals an opportunity to invest in diverse African shares, it also allows institutional investors to invest up to five percent of a fund’s capital in African investments.

“We have received a dispensation from the South African Reserve Bank to offer this ETF to institutional investors according to Regulation 28. We have already opened up the ETF to the retail market, and certainly have plans to bring the institutional investor on board,” said Madiba.

He added that the ETF would offer growth prospects for both individual and institutional investors.

This is the 53rd ETF listed on the JSE. The total ETF market capitalisation on the JSE is R73 bn. ETFs currently listed on the JSE includ top 40 equities, international equities, bonds, commodities, multi-asset classes and property equities.

ETFs track the performance of a group or “basket” of shares, bonds or commodities, the JSE explained.

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