Ashburton lists global government bond ETF on JSE

Mar 13th, 2018 | By | Category: Fixed Income

Ashburton Investments, the asset management arm of the FirstRand group, has launched the Ashburton World Government Bond ETF (ASHWGB SJ) on Johannesburg Stock Exchange.

Ashburton Global Government Bond ETF JSE

Members of Ashburton Investments celebrate the launch of the Ashburton World Government Bond ETF by blowing the traditional kudu horn at JSE’s market opening ceremony.

The ETF is the first to list on JSE to provide exposure to global government bonds.

Samantha Schoeman, head of index tracking at Ashburton Investments, said, “We had strong interest in the new ETF since the initial offering opened and we expect it to be popular with South African investors looking to diversify their portfolio holdings.

“It will provide retail and institutional investors with easy exposure to the world’s bond markets in one low cost, tax efficient ETF.”

The fund tracks the Citi World Government Bond Index, an index composed of fixed-rate, local currency, investment grade sovereign bonds from over 20 developed and emerging market countries.

The ETF is not a feeder fund, which is a relatively common listed fund structure on JSE, but instead invests directly in the bonds of the underlying index.

The biggest holdings in the ETF are US government bonds at 33.6%, followed by Japan (19.7%) and France (8.4%). South African government bonds make up just 0.5% of the total exposure, highlighting the diversification benefits for local investors.

“To date South African investors have had limited choice when it comes to bond ETFs but the launch of the Ashburton World Government Bond ETF will go a long way to redress the imbalance between scarce bond ETFs and the many equity ETF offerings on the JSE,” added Schoeman.

In terms of maturity buckets, the largest exposure is to bonds with 10+ years to maturity at 30.1%, followed by 1-3 years (24.8%), 3-5 years (19.1%), 7-10 years (13.4%) and 5-7 years (12.6%).

Distributions of income will be made quarterly to investors. The current yield on the ETF is approximately 1.4%.

The ETF’s minimum subscription amount is R5,000 and in increments of R1,000 thereafter. Its total expense ratio (TER) is 0.45%.

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