The ETF space in Zimbabwe could arguably be the most exciting investing space in Zimbabwe even though it’s only been open for around a year and a half. Investors have taken well to ETFs with three launched since the beginning of 2021. So much so that we are getting a fourth ETF listing on the Zimbabwe Stock Exchange; The Morgan and Co Made in Zimbabwe ETF. That will also be the second ETF listed by Morgan and Co which is responsible for the Multi-Sector ETF which is currently the best performing ETF on ZSE in 2022. The ETF will focus on Zimbabwean manufacturing concerns that meet particular criteria.
Morgan and Co
Morgan and Co are proving to be one of Zimbabwe’s most innovative capital markets players, winning that award at the 2021 Financial Markets Indaba Awards. They have proven their ability with managed ETFs with their Multi-Sector ETF which has navigated the market well so far in 2022. They are also a stockbroker (one of the better ones) and registered with the Securities Exchange Commission of Zimbabwe.
Made In Zimbabwe ETF
As mentioned before the fund will be constituted to invest in a basket of Zimbabwean manufacturing concerns. More on the initial counters later. The constituents all have at least 50% of their revenue coming from manufacturing activities and have been profitable in the last 2 financial years. Morgan and Co have also placed a requirement of 3% free float meaning at least 3% of the shares available in the market are not in the hands of institutional investors or related parties. The ETF will be actively managed.
Actively managed ETF
The words actively managed simply mean that the fund manager, in this case, Morgan and Co, will make decisions on the composition of the ETF from time to time and change as they see fit. This is done to take advantage of opportunities to maximise fund value. So just as they have done with MCMS, they will change the composition of the fund from time to time with the Made In Zimbabwe ETF.
The initial list of counters is not surprising. A good mix of strong Zimbabwean manufacturers many of which have a huge upside opportunity. The weighting of the counters is a bit more surprising. Heavyweights such as BAT (2.7%), Delta (4.1%) and Innscor (2%) each come in at less than 10% of the fund weight. The fund chose to go long on a resurgent ART Holdings (40.6%), Nampak (22.3%) and Hippo Valley (15.9%). Turnall (8.5%), Star Africa (3.2%) and battered Lafarge (0.6%) make up the rest of the fund.
The fund is expected to list by way of introduction on the 17th of June 2022. We can expect trading to start on Monday 20th of June. The initial price for the ETF units is expected to be $1 per unit.