The Botswana Stock Exchange (BSE) is looking to roll out a campaign to educate the investor community about the opportunities offered by Exchange Traded Funds (ETFs).
This comes on the backdrop of a 95 percent decline in ETF trading turnover in the first quarter of the year compared to the same period last year.
According to figures provided by the BSE, the volume of ETF units traded was 58,664 in the first quarter of 2016 while the turnover registered was P7.4 million. Over the same period in 2015, the number of units traded amounted to 2.39 million yielding a turnover of P126.5 million. Hardest hit by the investor apathy was the recently listed NewFunds ILBI ETF, which has not traded since listing on the BSE on 18 November 18, 2015.
“Our view is that there surely is appetitive for the New Funds ILBI ETF. Perhaps, there is not enough knowledge about the intricacies of the product.
“Having noted this, we are rolling out a campaign in local papers by way of Guest Columns titled “ETF Watch” that will appear in local papers monthly. The aim is to promote publicity of all the ETFs and also to analyse the performance on a monthly basis, the performance drivers and the value added by diversifying portfolios through the inclusion of ETFs,” said the BSE.
The NewFunds ILBI ETF is an ETF that tracks the performance of the index comprising South African Government’s Inflation-Linked Bonds and it has a primary listing on the Johannesburg Stock Exchange (JSE). On the JSE, NewFunds ILBI ETF has appreciated by 2.9 percent in the period, which could translate into an appreciation of 4.2 percent on the BSE when the 1.2 percent depreciation of the pula against the rand (March 31, 2016) is taken into account.
“This strategy is underpinned by the fact that ETFs are clearly performance diversifiers and return enhancers. If you look at the NewFunds ILBI ETF performance on the JSE translated into pulas, it has outperformed the DCI and this is a clear example of return diversification. We expect this initiative to help investors understand the benefits of ETFs so as to utilise them to benefit their portfolios,” said the BSE.
While ETF turnover has been subdued in the first quarter of the year, NewGold and NewPlat ETFs have surpassed that of the mainstream Domestic Companies Index (DCI) on a year to date basis. This was attributed to the strong appreciation of the prices of the underlying metals in global markets and the strengthening of the US dollar against the pula.