Datvest injects $70m war chest ahead of ETF listing

CBZ Asset Management has announced the injection of $70,5 million into Datvest’s modified consumer staples exchange traded fund (DMCSETF), which lists on the Zimbabwe Stock Exchange (ZSE) today.

CBZ Asset Management, which trades as Datvest, released details of the DMCSETF on Tuesday, saying it would track the ZSE’s modified consumer staples index (MCSI).

ZSE introduced MCSI on September 1 last year as part of a string of innovations that have broadened products on the multi-decade old bourse.

“CBZ Asset Management (Private) Limited is putting initial seed capital in the form of scrip in the exact weights of the ZSE modified consumer staples index,” Datvest said on Tuesday.

“The fund will then be listed on the ZSE by way of introduction. Additional investments from other investors will be used to buy shares on the market and add to the portfolio. Investors who wish to invest in the fund can do so through 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 statement said.

The DMCSETF constituents, and ZSEMCSI counters, are Delta Corporation Limited with initial seed capital of $24,5 million, National Foods Holdings Limited ($9,9 million), Innscor Africa Limited ($12,2 million), and Hippo Valley Estates ($5,1 million).

The others are Simbisa Brands Limited, OK Zimbabwe Limited, Meikles Limited, TSL Limited, Afdis and Dairibord Holdings Limited.

The counters are all involved in the retail sector, which demonstrates that Datvest is seeking to make the portfolio attractive to investors due the sector’s ease access to liquidity.

“All assets of the fund will be held by CBZ Custodial Services, who will act as custodian for the fund, while Stanbic Bank Zimbabwe is the trustee. Settlement of trades in the units will be done in electronic format in accordance with the settlement modalities approved by the ZSE,” Datvest said.

“This investment offers investors an opportunity to own the underlying stocks on the ZSE modified consumer staples index through one investment in the Datvest MCSETF. Therefore, the investor does not have any additional tasks or costs over and above those associated with dealing in any other publicly traded security.”

Datvest added: “The fund manager will be responsible for periodically replicating the ZSE modified consumer staples index in line with the index ground rules. Currently, the ZSE modified consumer staples index is reviewed once a quarter in line with all the other indices”.

According to the United States based financial and economics literacy website, Investopedia, typically, ETFs will track a particular index, sector, commodity or other
assets.

But, unlike mutual funds, ETFs can be purchased or sold on a stock exchange the same way that a regular stock can.

An ETF can be structured to track anything from the price of an individual commodity to a large and diverse collection of securities, and can even be structured to track specific investment strategies.

Thus, the DMCSETF will offer investors a way of tracking commodity-driven firms which will help them formulate investment strategies as the ZSE continues to act as a hedge to Zimbabwe’s depreciating currency.-newsday