Ashburton Investments to launch first World Government Bond ETF on JSE

Samantha Schoeman, Head of Index Tracking at Ashburton Investments.

Ashburton Investments, the asset management arm of the FirstRand group, announced today that it will list the Ashburton World Government Bond ETF on the JSE on 13 March 2018 in a boon for South African investors looking to diversify their portfolio holdings.

The new Exchange Traded Fund (ETF) will track the Citi World Government Bond Index (WGBI) which invests in fixed-rate, local currency, investment grade sovereign bonds from over 20 developed and emerging market countries.

The JSE will be the first exchange in the world to list the WGBI ETF and the new listing will, for the first time, give South African investors the opportunity to invest in global bonds on the JSE.

Samantha Schoeman, Head of Index Tracking at Ashburton Investments, said: “This is an especially exciting announcement as the launch of a global bond ETF will provide retail and institutional investors with easy exposure to the world’s bond markets in one low cost, tax efficient ETF.

“This listing is a series of firsts - for South African investors, the JSE and Ashburton Investments.”

The biggest holdings in the ETF are US government bonds at 33.6%, followed by Japan (19.7%) and France (8.4%)

The current yield on the ETF is approximately 1.4%. Distributions of income will be made quarterly. The listing will be in South African rand and local investors will not have to use offshore allowances to invest in the ETF.

South African government bonds are included in the ETF and make up 0.5% of the value of total holdings.

Schoeman added that bond investments are an essential part of balanced portfolios and similarly to share investing, it is prudent for South African investors to hold international bonds alongside local ones to benefit from diversification.

“To date South African investors have been underserved when it comes to bond ETFs but the launch of the Ashburton World Government Bond ETF will go a long way to redress the imbalance between scarce bond ETFs and the many and growing number of equity ETF offerings on the JSE.”

The book build for subscriptions is open and will close at 12pm on Monday 05 March 2018.

Trading will start on the 13th March 2018.

The main benefits of investing through the initial public offering (IPO) is receiving a direct allocation from Ashburton Investments and not having to pay broker fees which can mean a substantial saving for investors.

The minimum subscription amount is R5 000 and in increments of R 1 000 thereafter. There is no upper limit.

The targeted Total Expense Ratio is expected to be between 0.40% and 0.45%.