Barclays Africa will next week list its inflation-linked bond index Exchange Traded Fund (ILBI ETF) on the Botswana Stock Exchange (BSE).
The ETF will provide investors in Botswana with the opportunity to invest in the performance of a de facto SA government inflation bond benchmark index. The listing will be the first time that Barclays Africa has listed the ILBI ETF outside South Africa.
“The listing of our ILBI ETF in Botswana will give local investors direct access to a de facto SA Government inflation bond benchmark index while simultaneously increasing the liquidity of the BSE and deepening financial markets in Botswana,” the Head of Exchange Traded Funds at the Corporate and Investment Banking division of Barclays Africa, Michael Mgwaba said in a statement.
This will become the fourth ETF to trade on the BSE following the listing of Absa Capital’s NewGold in 2010, Nedbank Capital’s BettaBeta ETF in 2011 and Barclays Africa NewPlat last year.
The Barclays Africa South African Government Inflation-Linked Bond Index is a total return index comprising SA bonds issued by the South African government that are linked to the South Africa Consumer Price Index (CPI). The ILBI ETF provides investors with a hedge against inflation, helps investors diversify their investment risks and is suitable for investors seeking low cost, convenient alternatives to traditional non-listed investments.
The key difference between an inflation linked bond and conventional bonds is that the value changes in line with the South Africa CPI. Instead of the bond increasing in value, the holder is issued with “coupons” that are reinvested into the fund so as to increase the net asset value of the portfolio and consequently increase the value of each unit.
“The ILBI ETF provides investors with low-cost convenient alternatives to traditional non-listed products,” Mgwaba added. “The ILBI ETF can act as a building block for investors to use when constructing their own portfolios.”
Barclays Africa says it is a leading originator of ETFs in the South African market, and has 55 percent of the market share based on assets under management. The listing of the ILBI ETF in Botswana is the first listing of a Barclays Africa ETF outside of South Africa, in addition to its primary listing in South Africa.