Old Mutual sets modalities for ETF

Business Reporter
Old Mutual Zimbabwe has announced the modalities for its new investment instrument, the Zimbabwe Stock Exchange Top 10 Exchange Traded Fund (ETF), which will come onto the market on January 4.

The group will provide initial seed capital for the ETF.

“Old Mutual Zimbabwe Limited is putting initial seed capital in form of scrip in the exact weights of the top ten index in form of scrip in the exact weights of the top ten index.

“The fund will then be listed on the ZSE by way of introduction,” said the group.

“Additional investments from other investors will be used to buy shares on the market and add to the portfolio. Investors who wish to invest in the fund can do so through two ways, by buying units in the ETF through any registered stockbroker or alternatively investing in kind by delivering a basket of stocks in the exact weights of the fund through an authorised participant.”

According to Old Mutual, all assets of the ETF will be held by CABS Custodial Services, who will act as custodian for the fund.

Stanbic Bank Zimbabwe Limited is the fund’s Trustee.

An ETF is a type of security that involves a collection of securities that often tracks an underlying index.

Old Mutual’s new ETF will be based on the local bourse’s top 10 Index.

ETFs can contain many types of investments, including stocks, commodities, bonds, or a mixture of investment types.

“Settlement of trades in the units will be done in electronic format in accordance with the settlement modalities approved by the Zimbabwe Stock Exchange,” said the group.

“This investment offers investors an opportunity to own 10 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.

“The fund manager will be responsible for periodically replicating the ZSE Top Ten index in line with the index ground rules. Currently the Top Ten index is reviewed once a quarter.”

The ZSE Top 10 Exchange Traded Fund has brought a new dimension to the country’s limited capital markets.