BY TATIRA ZWINOIRA THE Zimbabwe Stock Exchange (ZSE) yesterday listed an agricultural-based Exchange Traded Fund (ETF), becoming the fourth this year and the fifth listing on ZSE.
Named the Cass Saddle Asset Management Agriculture Exchange Traded Fund, the ETF took off with seed capital of $36 199 404 and additional investments will be used to purchase shares on the market as addition to the portfolio.
An ETF is marketable security that tracks an index, sector, commodity, or other assets, but which can be purchased or sold on a stock exchange the same way a regular stock can.
The Cass Saddle ETF will track all the counters in the agricultural sector listed on the ZSE.
CABS Custodial Services will be the ETF custodian, holding the fund’s assets, while CABS Trustee Services will be the trustee.
Settlement of trades in the units will be in electronic format in accordance with the settlement modalities approved by the ZSE.
Launching the ETF, ZSE chairperson Caroline Sandura (pictured) said the agriculture sector was well documented as being the pillar of the Zimbabwean economy, contributing an average of 10% to gross domestic product over the past five years and slightly over US$1 billion in export receipts in 2021.
“The agriculture sector also supplies up to 60% of the raw materials required by industry. It is, therefore, commendable that Cass Saddle Asset Management picked this important sector for their ETF,” she said.
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“It is also commendable that despite the challenging macroeconomic environment, we are witnessing one of the best years for the ZSE in terms of new listings. This is the fourth ETF listing this year and the fifth listing including the Tanganda relisting that took place in February this year. The increase in listings is clearly coming from the new securities that, we as ZSE, deliberately promoted in our quest to diversify the security offerings. ZSE management and staff are currently working with various potential Real Estate Investment Trust issuers and we look forward to it being the next source of new listings.”
Sandura added that ETFs have a number of benefits, including portfolio diversification, liquidity and relatively lower management fees.
Meanwhile, Lands, Agriculture, Fisheries, Water and Rural Development deputy minister Davis Marapira who was the guest of honour said innovations such as the Cass Saddle ETF were key in improving access to capital from investment into the various value chains in the agricultural sector.
Mharapira added that the listing of the agriculture ETF represented the marriage between agriculture and the financial markets to promote agriculture as a business in line with the agriculture and food systems transformation strategy.
“For this reason, we celebrate all efforts by our financial market players in line with this vision of improving fortunes through the agricultural economy.
“It is pleasing to note there are many reasons why it is important but chief among them is the transparency, corporate governance and improved credit worthiness, this is the solution for channelling institutional funds into agriculture,” he said.
The EFT prospectus shows that it will be passively managed, thereby mitigating the element of “managerial risk” that can make choosing the right fund difficult.
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