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Tapiwanashe Mangwiro Senior Business Reporter

Financial services firm Morgan & Co will launch its Made in Zimbabwe Exchange Traded Fund (ETF), which will be listed on the Zimbabwe Stock Exchange (ZSE), tomorrow.

This would become the second ETF under the same fund manager, after the company recently launched a similar tradable security; multi-sector exchange traded fund.

Morgan & Co earlier this week released the prospectus for the ETF ahead of the launch tomorrow.

ETFs are baskets of different types of investments such as stocks, commodities and bonds that are pooled into a single entity, which then offers shares to investors that are subsequently traded on major stock exchanges.

“This prospectus relates to information to prospective investors of the establishment of an actively managed Made in Zimbabwe Exchange Traded Fund by Morgan & Co, whose objective is to seek capital appreciation by investing in listed Zimbabwe based companies whose revenues are primarily derived from manufacturing processes,” Morgan & Co said.

The fund is established under Zimbabwean law by a trust deed amended from time to time between Zimnat Asset Management, who are the ETF’s manager, and CBZ Trustee Services.

An actively managed ETF is a form of exchange-traded fund that has a manager or team making decisions on the underlying portfolio allocation, otherwise not adhering to a passive investment strategy.

An actively managed ETF will have a benchmark index, but managers may change sector allocations, market-time trades, or deviate from the index as they see fit. This produces investment returns that do not perfectly mirror the underlying index.

Morgan & Co’s Made in Zimbabwe ETF has 10 equities of different weights namely Amalgamated Regional Trading (40,6 percent), Nampak Zimbabwe (22,3 percent), Hippo Valley (15,9 percent), Turnall Holdings (8,5 percent), Delta Corporation (4,1 percent), StarAfrica (3,2 percent), British American Tobacco (2,7 percent), Innscor Africa (2 percent) and Lafarge Cement (0,6 percent).

An initial seed capital of $2,5 billion in the form of scrip done through different related company weights and counters will inevitably be changed over time since it is an actively managed ETF.

“Additional investments from other investors will be used to buy shares on the market and add to the portfolio. A key aim of the fund is to support and invest in Zimbabwe’s manufacturing industry.

“The fund will also consider investing up to 20 percent of the ETF value in listed non-manufacturing companies and companies seeking to raise additional capital,” the fund manager said.

In Zimbabwe, Old Mutual pioneered the ETF listings when it listed the Old Mutual Zimbabwe Stock Exchange Top Ten Index Exchange Traded Fund in January 2021.

Another securities firm, Datvest Securities, this year launched its exchange traded fund with the listing being the third one on the ZSE.

The ETF industry globally ended 2020 with over US$5,5 trillion investments, according to Investment Company Institute statistics.

According to the ZSE prospective ETF issuers will have to prove that the underlying asset or security track is sufficiently liquid to satisfy the exchange such that there will be proper price formation in the product.