The Securities and Exchange Commission of Zimbabwe (SECZ) hosted its second webinar on Exchange-Traded Funds (ETFs) on the 16th of April. The webinar which ran under the theme “Tried and Tested but New to Zimbabwe,” marked the end of SECZ’s webinar series on ETFs.
ETFs have become one of the most popular investment vehicles for both institutional and individual investors globally. According to Statista, a statistics portal for market data and market trends, “In 2020, the assets managed by ETFs globally amounted to approximately USD7.74 trillion.” This represents the development of assets of ETFs worldwide from 2003 to 2020. The series aimed to give context to this phenomenon since it is a relatively new product in Zimbabwe.
Farai Mpofu, Head of Investor Education at SECZ, and Happiness Zengeni, a well-renowned journalist and financial analyst, hosted an insightful conversation on the ETF industry. The hosts were joined by industry experts Marjorie Mayida, Managing Director and Chief Investment Officer of Old Mutual Investment Group Zimbabwe (Private) Limited (OMIG), and General Manager of Southern Trust, Thandiwe Shonhiwa, who is a Registered Stockbroker on the Zimbabwe Stock Exchange (ZSE.)
The webinar facilitated a conversation with senior and experienced women in the capital markets sharing insights on the new product following SECZ’s mission to support the development of the capital markets, investor knowledge, as well as, investor protection advancement through information, education, and knowledge,’ according to Farai Mpofu
The speakers defined an ETF as “a basket of securities that tracks an underlying index”. ETFs can contain various investments like stocks, commodities, and bonds.
On 1 December 2020, Old Mutual Investment Group launched the first Zimbabwe Stock Exchange (ZSE) Top Ten Index ETF in the country and started trading in January 2021. Marjorie Mayida described the ETFs as passively managed and fully funded (unleveraged) open-ended funds which track the performance of a specified security.
The Old Mutual ZSE ETF tracks the ZSE Top Ten Index, and it consists of the top 10 counters by market capitalization that is listed on the ZSE. The level of uptake points to how well-received this product is. And according to Marjorie when the ETF was launched Old Mutual issued 80 million units, and subsequently issued more to make the total 131 million units.
The panelists also discussed risks associated with ETFs which include tracking error, not being well-diversified, capital market depth, and higher transactions in Zimbabwe. Despite these risks, Thandiwe from a Stock broker’s perspective emphasized that the capital market has potential as ETFs now represent everything from broad market indices to niche sectors or even alternative asset classes. Furthermore, they are traded like any other stock.
The panelists urged investors to be proactive and be engaged in investor education to broaden their scope. For example, Thandiwe shared how she has been actively encouraging women who do “marounds” (savings groups) to invest their money in the capital market where there is protection and incremental value.
According to the panelists, though trends show listings are going down the introduction of ETFs indicates that there is potential for a diversified investment portfolio. They further explained that new investors are coming in due to online investment applications which will hopefully attract foreign investors and listings.
The webinar was information-packed, and members of the audience engaged in the Question and Answer section. SECZ hopes to continue being a platform to facilitate conversations that build Zimbabwe capital markets to be resilient by empowering investors.
This article was written as part of the Securities and Exchange Commission of Zimbabwe’s Investor Education Campaign in partnership with the Investor Protection Fund. For more information, please email [email protected]