HARARE – Old Mutual Zimbabwe is set to list the Old Mutual Zimbabwe Stock Exchange Top Ten Index Exchange Traded Fund on January 4, 2021. The investment instrument, which is part of concerted efforts by the ZSE to increase its product offering will be listed by way of introduction.
ETFs are passively managed, fully funded (unleveraged) open ended funds which track the performance of a specified security. Old Mutual Investment Group Zimbabwe will establish an ETF that tracks the ZSE Top Ten Index. The ZSE Top Ten Index consists of the top 10 counters by market capitalization that are listed on the ZSE.
All the necessary approvals have been obtained. According to a statement from Old Mutual, the group (OMZL) will put initial seed capital on the day of listing. 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 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 authorized participant.”
Currently, the authorized participant is Old Mutual Investment Group Zimbabwe.
All assets of the fund will be held by CABS Custodial Services, who will act as the custodian for the fund, while Stanbic Bank Zimbabwe Limited is the Trustee. Settlement of trades in the units will be done in electronic format in accordance with the settlement modalities approved by the ZSE.
OMIGZ, ETF fund manager, will be responsible for periodically replicating the ZSE Top Ten index in line with the index ground rules as defined by the ZSE.
The reference Top Ten index will be reviewed once a quarter.
ZSE chief executive Justin Bgoni said the ETF listing provided the Zimbabwean investing public with a product that has been successfully used elsewhere in the world to generate wealth.
“It gets us closer to matching our peer exchanges in terms of sophistication and array of products on offer. We are hoping that it also increases liquidity on the exchange as it has done elsewhere”
Meanwhile, ZSE is also readying to launch the Real Estate Investment Trusts following the tax incentive on the instrument that were announced by Finance Minister Mthuli Ncube in the 2021 National Budget.
According to the Budget, the minister exempted income accruing to REITs from corporate income tax subject to several conditions. The exemption will apply when a fund receives at least 80% of its gross income from real estate, distributes a minimum of 80% of its taxable income in the form of shareholder dividends each year; when it has a minimum of 100 shareholders after its first year of existence and has no more than 50% of its shares held by five or fewer individuals during a taxable year. It should also be listed on an exchange registered in terms of the Securities and Exchange Act.
Bgoni noted that while the exchange cannot give a timeline on when the REITs would be launched, it had already started discussions with a few potential listings. -Financial Express.