By Peter OBIORA InvestAdvocate
Lagos (INVESTADVOCATE)-The Nigerian Stock Exchange (NSE) on Friday listed the first shari’ah compliant Equity Exchange Traded Fund (ETF) by Lotus Halal.
This is coming on the heels of an offer for subscription of 100 million units of Lotus Halal Equity ETF at an indicating price approximately equal to 1/200th of the value of the NSE-Lotus Islamic Index (NSE LII) on the day preceding the subscription. The application opened August 14th and closed September 11, 2014.
The Islamic finance company at the ‘Facts behind the Listing’ said the NSE-LII is an equity index that tracks the performance of a basket of carefully selected Shari’ah compliant equities listed on the floor of the NSE.
The non-interest finance company said the Lotus Halal Equity ETF is targeted at ethical investors and that the daily price movement would be determined by the forces of demand and supply.
Damilola Ajayi, managing director, Vetiva Fund Managers Ltd at the ‘Facts behind the Listing’ said investors who choose not to trade on the secondary market, may purchase/sell units of Lotus Halal Equity ETF securities through the process of creation/redemption, subject to a minimum creation/redemption value threshold of a block of ETF units.
The Islamic finance company affirmed the NSE-Lotus Islamic Index (NSE LII) launched in 2012 and at inception was made up of 15 liquid and high capitalised stocks with strong fundamentals would help track the performance of these stocks.
According to the firm, the 15 screened shari’ah compliant equities that comprise the NSE LII include beverage makers, Cadbury Nigeria Plc and Nestle Nigeria Plc, soap manufacturers, PZ Cussons Nigeria Plc and Unilever Nigerian Plc, cement companies, Dangote Cement Plc, Ashaka Cement Plc, Cement Company of Northern Nigeria (CCNN) and Lafarge Africa.
Others are Chemical & Allied Plc, agro-allied firms Okomu Oil Plc, and Presco Plc, construction giant, Julius Berger Nigeria Plc, and salt makers, National Salt Company of Nigeria (NASCON), United African Company of Nigeria Plc and drug makers, Glaxosmithkline Consumer Nigeria Plc.
The company disclosed that each selected component stock has a capped weight of 30 percent, while each sector has a capped weight of 40 percent. ‘’ Companies owned by a group should not control more than 40 percent of the total index market capitalisation,’’Lotus Capital added.
Masud Balogun, company secretary at Lotus Capital further affirmed that the NSELII comprises a well diversified basket of securities which would avail investors opportunity to diversify their portfolio and mitigate risk of market volatility.
‘’Coming after the listing of New Gold ETF and Vetiva Griffin 30 ETF, Lotus Halal Equity Equity ETF is expected to grow between 15 per cent to 30 per cent annually in line with global ETF industry,’’Balogun affirmed.
