Cloud Atlas builds out offering on JSE with Africa ex-SA real estate ETF

Jun 4th, 2018 | By | Category: Alternatives / Multi-Asset

Cloud Atlas Investing, a South Africa-based ETF issuer, has launched the Cloud Atlas Limited AMI Real Estate ex-SA ETF (AMIRE SJ) on Johannesburg Stock Exchange (JSE). The new fund invests in prime real estate companies listed on the African continent excluding South Africa.

Maurice Madiba, chief executive officer of Cloud Atlas Investments

Maurice Madiba, chief executive officer of Cloud Atlas Investing.

AMIRE tracks the custom in-house AMI Real Estate ex-SA Index, a market capitalisation-weighted index that primarily includes real estate investment trusts (REITs) with property portfolios comprising residential, retail, industrial and tourism assets as well as new developments. AMI stands for African Markets Index.

Fifteen African exchanges outside of South Africa are eligible to have REITs included in the index but, as of the Q4 2017 rebalance, only five –Egypt, Morocco, Botswana, Nigeria and Mauritius – contributed securities to the index.

Rebalancing occurs on a quarterly basis.

According to Cloud Atlas, the property sector in Africa offers huge potential for investors looking to get exposure to real estate assets that cater to the changing population dynamics on the continent.

The firm notes that Africa has one of the youngest populations in the world and is experiencing a growth spurt in its urbanisation. This trend is expected to grow as more Africans move into urban areas and more businesses establish areas of operation to service this growing population.

London-headquartered estate agents Knight Frank estimates that before the end of the century 40% of the world’s population will come from Africa.

The African property sector has also attracted significant capital inflows from foreign investors seeking to capture the potential economic and demographic opportunities. While China usually occupies the top spot in terms of investments into Africa, the property sector has attracted flows from the Middle East, as well as South African investors going into the rest of Africa.

Knight Frank reported, “The rapidly growing economies of Africa are catching the attention of increased numbers of property investors and corporate occupiers. Africa is no longer viewed as a region of long-term economic distress, but is increasingly seen as a continent of opportunity.”

Maurice Madiba, chief executive officer of Cloud Atlas Investing, says the new ETF provides a well structured vehicle to owning property on the rest of the African continent.

“We have a fantastic array of property companies and having an ETF of this nature really lifts the profile of African markets which are otherwise over-looked in favour of developed markets like the US and Europe,” he said. “The tag line #OwnYourOwn embodies the power ETFs have to transform the investment landscape for ordinary people.”

AMIRE has total fees of 0.75%. The fund is the first ETF to list on JSE that offers targeted exposure to African real estate excluding South Africa. Investors could previously only access on the exchange ETFs providing exposure to South African property indices or indices covering the global property market.

AMIRE is not the first ex-SA ETF to be unveiled by Cloud Atlas. In April 2017 is launched the Cloud Atlas Big50 Ex-SA ETF (AMIB50 SJ). This fund also tracks a proprietary in-house index and provides exposure to an emerging markets equity investment of 50 companies listed across 15 countries in Africa, excluding South Africa. AMIB50 has total fees of 0.75% and currently has around R15 million in assets under management.

The new listing brings the total number ETFs listed on the JSE this year to 11, with a total market capitalisation of over R72 billion.

Donna Nemer, director of capital markets at the JSE notes the exchange is excited about the continued growth and development of the ETF industry. “The JSE is seeing an encouraging surge in the listing of new ETFs, which increasingly offer investors greater exposure to a range of sectors and also global markets,” she said.

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