Market Capitalisation of ETFs and ETNs Now Exceeds R33 billion

The market capitalisation of Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs), listed on the JSE, grew by 21 percent in 2010, increasing from R27,5 billion at the end of 2009 to R33,3 billion by end 2010 (see attached Schedule A).

The following Table 1 lists the market cap by product issuer. Absa Capital (NewFunds) continues to be the top provider of Exchange Traded products, measured by market capitalisation. However, NewGold ETF, which gives direct exposure to physical gold bullion through a listed security on the JSE, accounts for some 93 percent of funds held in Absa Capital ETF products, which indicates far less market acceptance for the other seven ETFs listed by NewFunds. .

Satrix Managers, the second largest issuer of ETFs, has a broader range of successful ETF products. Although Satrix 40 (market cap R6,6 billion) is still the dominant product in the Satrix range, the Satrix DIVI grew solidly in 2010 to become the second biggest product in the stable, helped by its excellent price performance over the past three years.

Table 1

Mike Brown, Managing Director of etfSA, comments “2010 was the third year in a row of solid growth in the ETF industry. There are now 31 listed ETFs and ETNs, with 9 companies registered to issue exchange listed products. The growing number of ETF issuers, notably amongst the investment banks, indicates that new product offerings and innovations should be a feature of 2011 and beyond. The industry currently, or shortly will, covers all asset classes and offers a consistently widening selection of investment choices. It is likely that ETFs, by offering greater product choice, will become increasingly competitive with actively managed funds in the South African marketplace.”