admin
Business Writer
More funds found their way into Old Mutual’s exchange traded fund (ETF) on Tuesday as investors remain upbeat that the instrument will offer them stable returns and less risk in the year ahead.
Yesterday’s total investment of $12,366,267 was almost three times more than the $4,742,729 that was invested on the ETFs first day of trading on Monday.
The unit price however closed 0.22 percent lower to $1. On listing day, the ETF had gained by a similar margin.
Old Mutual’s ZSE Top 10 ETF is made up of ZSE’s ten largest stocks by market capitalisation.
On Tuesday, the ZSE revealed the companies that will make up the Top Ten Index and these include Delta, CBZ, Econet, Innscor Africa, Hippo, Cassava, Padenga, BAT Zimbabwe, OK Zimbabwe and FBC Holdings.
CBZ and Delta account for more than 40 percent of the ETFs total portfolio.
Local stockbrokers Morgan & Co pointed out that one of the advantages of ETF is the lower fees in comparison to actively managed investments.
The Old Mutual ETF incurs only 0.675 percent per annum.
“ETFs are typically more liquid than some of their individual constituents,” wrote Morgan & Co in a note to clients.
For the retail investor, the Old Mutual Top 10 ETF allows one to invest into blue chip stocks with less capital.
“For the institutional investor, the ETF allows asset managers to maintain exposure to equities that drive overall market performance (as opposed to holding funds as cash) during portfolio restructuring, rebalancing, and managerial changes,” wrote Morgan & Co.
The brokerage firm however highlighted some of the disadvantages of ETFs including the fact that the Old Mutual Top Ten ETF is not well diversified with two of the counters accounting for 40.5 percent of the portfolio
Bongani Ndlovu