First global bond ETF listed on the JSE

13th March 2018 By: Marleny Arnoldi - Creamer Media Online Writer

First global bond ETF listed on the JSE

JSE capital markets strategy head Nicola Comninos & Ashburton CEO Boshoff Grobler

The Ashburton World Government Bond Exchange Traded Fund (ETF) listed on the JSE on Tuesday, becoming the exchange’s first global bond ETF.

The listing will bring the number of ETFs listed on the JSE to 67 – exceeding the JSE’s total market capitalisation of R73-billion.

“ETFs are an increasingly important building block in ordinary South Africans’ investment portfolios, as these products offer exposure to a wide range of investment destinations and strategies in a way that is easy to understand, and accessible through an affordable monthly contribution,” stated JSE primary markets head Prejelin Naggan.

This listing broadens the JSE’s offering of indexed funds through which investors can obtain exposure to a range of geographic regions and investment strategies in an affordable manner. The ETF allows local investors the ability to invest in Rand without having to use offshore allowances to invest in the ETF.

The Ashburton World Government Bond ETF will track the Citi World Government Bond Index (WGBI), which invests in fixed-rate, local currency, investment grade sovereign bonds.

The WGBI consists of over 20 developed and emerging market countries that meet specific criteria for market size, credit quality and barriers to entry. These countries include the US, the UK, Canada, Germany, Japan, France, Australia and South Africa.

“The JSE is excited to add its first global bond ETF to the market, and proud to be the first exchange to list the Ashburton WGBI ETF. The local ETF industry has demonstrated its ability to continue evolving and broaden its offering in line with investors’ needs and demand, at an affordable cost and in an easily accessible manner,” said Naggan.

ETFs are investment products that comprise an investment portfolio of shares or other assets, such as bonds and commodities based on a predetermined method.

“The way that the portfolios are composed is usually determined by an underlying index of securities – in this case the WGBI. The ETF tracks the value of the underlying index by investing in the bonds that make up the index in the same ratio to each other as they are in the index. ETFs provide investors with access to low-cost passive investment products incorporating investment management expertise.”

Ashburton Investments head of index solutions Samantha Schoeman added that the listing of the ETF expanded the range of worldwide investment options available to local investors giving the South African retail and institutional market the opportunity to diversify their portfolios.

“We are confident this will add depth to the credit investment opportunity set available locally,” she stated.