Absa Capital courts investors for historic ETF

MBONGENI MGUNI
Staff Writer | Thursday June 24, 2010 00:00

 

ETFs are investment funds that track the performance of an index or commodity, the fund being listed on the stock exchange and traded like shares. Absa Capital's gold ETF tracks the price of gold and is supported by physical gold assets which currently amount to 48 tonnes valued at P12.9 billion. The gold ETF is Absa Capital's flagship ETF product, providing a return of 24.74 percent since its inception in November 2004.

Effectively, local investors will have the opportunity to own gold, with the value of their investments determined by the price of gold. At current rates, one security or unit of investment in the ETF will cost about P85, with each unit bought being equivalent to one one-hundredth of a gold ounce.

The imminent listing will be a secondary one for the ETF, which is already listed and trading on the Johannesburg Stock Exchange. It will be Botswana's first ETF and the BSE will be only the third bourse in Africa to offer the instrument, after South Africa and Egypt.  Yesterday, Absa Capital Principal Vladimir Nedeljkovic said the forthcoming instrument presented a unique opportunity for retail and institutional investors, particularly in a market plagued by few investment opportunities.

'We are very excited that after a long period, we are finally on the brink of listing this product,' he told journalists at a briefing at Exchange House in Gaborone.

'This product is classified as a domestic asset and falls within the 30 percent that Botswana institutional investors are statutorily required to invest domestically. We hope to be in that investment.

'This week, we will be talking to retail investors and we have been fortunate to have all the brokers helping us to invite people in groups over the next few days. Next week, we will be talking to all the relevant institutional investors in Botswana.

'Some of them have already invested in the gold ETF via the JSE listing and they have said if the product was available here, they would participate in it.'

Nedeljkovic said unlike shares or initial public offers, the gold ETF would have limitless securities to offer investors. 'If anyone wants to buy, they can because we use that money to buy more gold and issue more units,' he said. 'The number of securities in issue will be based on the demand.

'We track the price of gold throughout the day and as an investor, you can track it too and know the value of your investment at any time. The securities can be bought and sold like shares, providing safe and convenient access to investment.'

BSE Product Development Manager, Thapelo Tsheole, said the local bourse had revised its fees downwards to facilitate increased investment in the historic product. He said the brokers engaged to facilitate purchase of the ETF's securities had also been given guidelines on fees to charge.

In addition, Tsheole said, unlike shares which can only be bought from a minimum of 100, the gold ETF would be bought from a minimum of one unit after its listing.