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Zimbabwe: ETF Boon for Retail Traders

Retail traders on the Zimbabwe Stock Exchange (ZSE) can easily buy shares of the Old Mutual ZSE Top Ten Exchange Traded Fund, after the bourse recently moved to make the ETF available on its trading platform — ZSE Direct.

The Old Mutual ZSE Top Ten ETF tracks the ZSE Top 10 Index, which consists of the largest 10 companies, as ranked by investable market capitalisation, listed on the local equities market.

“The Zimbabwe Stock Exchange Limited advises stakeholders that the Old Mutual ZSE Top Ten ETF is now available through ZSE Direct.

“To invest in the Old Mutual ZSE Top Ten ETF, you are required to have an existing account on ZSE Direct or a trading account with your stockbroker.”

The top 10 index has historically accounted for around 65 percent and 80 percent of the entire listed market capitalisation, and is naturally highly concentrated, with the two largest companies — financial services conglomerate CBZ Holdings and beverages manufacturer Delta Corporation — accounting for weights of 29,8 percent and 17,8 percent respectively.

The ETF, therefore, makes it easier for small retail traders to buy, hold and sell stock in these big corporations, which otherwise they would not afford to.

The introduction of online trading platforms such as ZSE Direct and C-Trade have opened up significant opportunities for retail investors in the country.

This investment offers investors an opportunity to own 10 underlying stocks through one investment in the ETF.

Previously, investors who wanted to invest in the fund can do so in two ways, by buying units in the ETF through any registered stockbroker or alternatively investing in kind, by delivering a basket of stocks in the exact weights of the fund through an authorised participant.

The Old Mutual ZSE Top Ten ETF is, however, yet to be available on the C-Trade platform.

Capital markets essentially function for the trading of equity and debt instruments, and to this extent they channel savings and investment between suppliers of capital such as retail investors and institutional investors, and users of capital like businesses, Government and individuals.

And broadening the options within the local capital markets may help boost the economy as firms get increased opportunity to raise long-term funds. –