South African investment manager STANLIB Index Investments has launched a range of global passive ETFs on the Johannesburg Stock Exchange (JSE).
Prejelin Naggan, Head of Primary Markets, JSE, and Wehmeyer Ferreira, Chief Operating Officer of STANLIB Index Investments.
Four of the new ETFs offer exposure to equities, and one to fixed income.
Each tracks a different international index and is denominated in South African rand (ZAR).
The ETFs have been constructed via a feeder fund structure, where the proceeds from the ETF is invested not in the underlying index constituents but into an overseas-listed ETF tracking the target index.
Using a feeder-fund structure can be more efficient in less developed capital markets or in jurisdictions where the tax regime is less favourable.
In the case of STANLIB, the ETFs invest in iShares products issued and listed in Europe and the US, taking advantage of BlackRock’s deep market expertise and economies of scale.
In return for providing a locally listed and ZAR-denominated ETF, STANLIB adds 20 basis points of fees to the underlying iShares ETF.
The “Global Range”
The STANLIB Global REIT Index Feeder ETF invests in the iShares Global REIT ETF, which in turn tracks the FTSE EPRA/NAREIT Global REIT Index. The FTSE EPRA/NAREIT Global REIT Index tracks the performance of listed real estate companies and Real Estate Investment Trusts (REITs) worldwide. By country, the index has a very high exposure to the US at 61.6%, followed by Japan at 7.5%. The expected total expense ratio of the ETF is 0.34%.
The STANLIB S&P 500 Info Tech Index Feeder ETF invests in the iShares S&P 500 Information Technology Sector UCITS ETF, which in turn tracks the S&P 500 Info Tech Index. The S&P 500 Info Tech Index holds those companies that are included in the S&P 500 Index and classified as members of the GICS Information Technology sector. The expected total expense ratio of the ETF is 0.35%.
The STANLIB S&P 500 Index Feeder ETF invests in the iShares Core S&P 500 UCITS ETF, which in turn tracks the S&P 500 Index. The S&P 500 tracks the performance of the top 500 US-listed companies and captures approximately 80% coverage of available market capitalisation. The expected total expense ratio of the ETF is 0.27%.
STANLIB MSCI World Index Feeder ETF invests in the iShares Core MSCI World UCITS ETF, which in turn tracks the MSCI World Index. The MSCI World has over 1,600 constituents and captures large- and mid-caps across 23 developed markets countries. The expected total expense ratio of the ETF is 0.40%.
The STANLIB Global Government Bond Index Feeder ETF invests in the iShares Global Govt Bond UCITS ETF, which in turn tracks the FTSE G7 Government Bond Index. The index includes Canada, France, Germany, Italy, Japan, the UK, and the US. This Index covers approximately 85% of the market value of the FTSE World Government Bond Index. The expected total expense ratio of the ETF is 0.40%.
Global building blocks for local investors
Prejelin Naggan, Head of Primary Markets at the JSE, said: “The local ETF industry is responding to the need for products that gives exposure to a diversified range of global regions and sectors at a lower cost. The JSE is proud to provide a platform for our clients to list products that allow South African investors to diversify their portfolios and gain exposure to global markets using products that are easy to access and understand.”
Wehmeyer Ferreira, COO of STANLIB’s Index Investments, added: “Local investors do not need to be experts in global securities or pay high costs to benefit from global investment returns. Global investing can be an effective way to diversify your existing investments and provide a means to profit from faster growing economies around the world.
“The funds can confidently be used as building blocks for an investor’s portfolio to expand their investment opportunities outside of South Africa in a low cost and transparent manner.”
The new listing brings the number of ETFs on the JSE to 70.