By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Nigerian stock exchange (NSE) Friday listed N2.752 billion worth of Vetiva Griffin 30 exchange traded fund (VG 30 ETF) securities at N17.27 kobo.
To list the N2.752 billion worth of VG 30 ETF securities, Vetiva Fund Managers Limited listed a total of 159,400,000 units of at N17.27 which were admitted to trade at the NSE on Friday, March 14, 2014.
The VG 30 ETF is an open-ended ETF managed by Vetiva Fund Managers and it’s designed to track the performance of the constituent companies of the NSE 30 index and to replicate the price and yield performance of the index.
Damilola Ajayi, managing director (MD) of Vetiva Fund Managers, said the VG 30 ETF seeks to give investors optimal exposure to the Nigerian bourse, ‘’over 90% exposure on a market capitalisation basis,’’ he said.
Ajayi said the underlying securities are held by a custodian in the name of a trust for investor protection and the entry and exit costs for ETFs are generally lower when compared to traditional Unit Trusts.
According to him, it’s expected that the fund will pay bi-annual distributions (twice a year).
The MD of Vetiva Fund Managers said in line with the growing ETF industry, Vetiva developed the VG 30 ETF to give investors optimal exposure to the Nigerian bourse by tracking the movement of the NSE 30 index.
Oscar Onyema, chief executive officer (CEO) of the Nigeria’s exchange in his opening remarks at the ‘’Facts behind the Listing’’ presentation, said this is indeed a major milestone in the remodelling of the capital market landscape, and it marks the beginning of a new era in product offerings for investors in particular, and the market in general.
Onyema said ETFs have experienced astounding success as the fastest growing investment product of the last 20 years. ‘’Global assets grew to $2.25 trillion in 2013, registering over 28% Year-on-Year growth. Out of the total growth, new cash flows contributed 14.7% (+$259bn), while the remaining 13.5% came from asset price increases. In 2013, ETFs accounted for 27% of all equities trading in the US,’’ he said.
The NSE CEO affirmed that collective investment schemes (CIS) are not new to our market. ‘’Today, there are over 20 mutual funds on memorandum listing on the NSE, but with ETFs, investors get the diversification offered by mutual funds, along with the intra-day price discovery of equities, all in one product,’’ Onyema said.
According to the CEO at the Nigeria’s exchange, investors who prefer to trade in an equity type consult can get instant equity diversification with the VG 30 ETF. ‘’In recognition of the immerse potential inherent in ETFs, the Exchange has created other tradable indices to track various sectors of the market and we look forward to working with issuers such as Vetiva to roll them out,’’ he said.
As earlier reported by InvestAdvocate, the offer for subscription of 100,000,000 units of the VG 30 ETF securities commenced on Monday, 13 January 2014 and closed on Friday, 31 January 2014. It was said to have been fully oversubscribed at a unit price equal to 1/100th of the value of the NSE 30 Index on the day preceding the subscription to investors at the Nigerian capital market (NCM).
Issuing house to the VG 30 ETF, Cordros Capital Limited said offer for subscription on a “Securities for Units” basis will deliver a portfolio of securities of the NSE 30 Index constituent companies, in exchange for units in the VG 30 ETF.
Cordros said minimum subscription limit was 5,000,000 units; indicating a block or 50 baskets of VG 30 ETF securities and applications for more than 5,000,000 units must be in multiples of 100,000 units.
The Subscription rate:159.4% (all of which was absorbed). Si (6) applications for 159,400,000 units valued at N2, 941,874,901.20 were received in connection with the offer.
Ernst & Young, third largest multinational professional services firm in the world said the global ETF industry as at October 2013 had 5,042 ETFs, with 10,053 listings, assets of US$2.3 trillion, from 215 providers on 58 exchanges and annual growth of 15%-30% is predicted around the globe over the coming five years.
