Pritu Makan
ETFSA has listed the JSE's first listed actively managed balanced ETF
| Name |
ETFSA Balanced Foundation Prescient Actively Managed ETF |
| Share Code |
ETFSAB |
| Targeted Annual Total Expense Ratio |
0.52% |
| Index Tracked |
ASISA SA Balanced High Equity Avg Index |
| Listing Date |
Monday, 26 August 2024 |
| Issue price |
1000 cents (R10) |
| Trading starts at variable iNAV |
Monday, 2 September 2024 |
The ETFSA Balanced Foundation Prescient Actively Managed Exchange Traded Fund (ETFSA Foundation Prescient AMETF) is an SA Multi-Asset High Equity portfolio that offers a strategic asset allocation of multi-asset classes. This means that the ETF will include a mix of equities, bonds, property, cash, and offshore investments, with instruments in these different asset classes being determined and adjusted by professional investors.
The aim is to achieve steady, long-term capital growth (price appreciation) that is supplemented with income (interest and dividends). The portfolio is suitable for investors with a moderate-to-high-risk profile.
Instruments acquired in the portfolio will include a combination of exchange-traded products (ETPs), notes and securities listed both on local and global markets. The portfolio may also invest in collective investment schemes (like unit trusts) locally and abroad; and other listed and unlisted financial instruments to execute on forward currency, interest rate and exchange rate swap transactions.
The ETFSA Balanced Foundation Prescient AMETF is designed for investors who seek a balanced approach with regards to investing. By blending stable income-generating assets (like bonds, property and cash) with growth-oriented investments (like equities), both locally and abroad, it aims to achieve sustainable long-term returns, while mitigating downside risks. The fund will mirror the existing Wealth Default strategy run by ETFSA within its Retirement Annuity (RA) Fund, which is a fixed asset allocation strategy with scope for some flexibility, if required, hence the active component.
Features and benefits
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Investors obtain exposure to both South African and global equities and bonds.
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The ETF has an expected total expense ratio (TER) of ~0.52%, which is lower than the typical balanced unit trust. This will appeal to investors seeking a cost-effective, multi-asset portfolio selection that is readily available on the market, and that can form the foundation of many investments.
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The packaging of this balanced investment portfolio solution, as a Collective Investment Scheme listed on the JSE, brings strong regulatory control, compliance, and governance to investors.
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It has a multi-asset framework that conforms fully with both the Regulation 28 Requirements of the Pension Fund Act, as well as Board Notice 90 of the FSCA that applies to the exposure requirements for a Collective Investment Scheme.
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The ETF has a fixed-asset allocation strategy to various asset classes. However, in the event of regulatory changes such as Regulation 28 requirements or secular changes in markets, the asset allocation strategy can become more flexible to accommodate such events.
Risks
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The strategy is exposed to local and global equities as well as multiple asset classes, which means that returns will vary as market movements dictate.
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Because the asset allocation is fixed, the manager will not necessarily respond to shorter-term opportunities and risks in specific asset classes (i.e. make "tactical changes"), as is typically the case in an actively managed balanced portfolio or unit trust.
FNB Stockbroking and Portfolio Management view
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This is a low-cost option that will provide investors with exposure to a broad spectrum of local and offshore equities as well as various asset classes. The investment approach of blending stable income-generating assets with growth-oriented investments provides ample diversification.
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The ETF is listed on the JSE, making trading easy if you have an existing stockbroking account. In the event of buying a unit trust with a balanced mandate, an additional platform will have to be used.
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This ETF offers a good base to start investing when following a "core and satellite" approach. This means that the bulk of assets can be in an ETF such as this one, complemented by specific opportunities in other ETFs or single stocks.
