Stanbic IBTC announced launch of its N1billion Exchange Traded Fund (ETF) this week hoping to attract multitude of passive investors, Pension funds and institutional investors both locally and abroad. Whilst this is indeed a break through it is not the first ETF in the Nigerian equity space.
Earlier this year, Vetiva launched its own ETF called VG 30 giving us a measure of how ETF’s have faired this year in comparison to the NSE 30 which they incidentally both mirror. The chart below depicts what has happened so far.
The Vetiva ETF listed at N17.27 per share and has risen as high as N19.76 and currently is about N18.48. The fund has therefore returned about 7.85% this since it debuted compared to the NSE 30’s 7.5% within the same period. They also paid interim dividends of 10kobo per share in July 2014 and pay dividend twice a year.
ETS’s basically mirror the return of the Indices they are tracking on the premise that it is hard to beat the market. Therefore mirroring the index in terms of its weighting and pricing.
The risk however is that in a year where the NSE 30 Index is underperforming the broader index the ETF share price will also underperform and will drop in value. However this is enough comfort for investors who are not seeking to constantly beat the market.
Regrets
An earlier version of this article put the return at a grossly misleading 147%. The exchange and even Bloomberg places the ETF lowest price at N7.5 which quite confused me. I still do not know why it has its lowest price as N7.5 when records show it never went that low. Nevertheless, I should have gone further to confirm before posting. The error was not deliberate and is highly regret.
