Cass Saddle ETF in positive start

THE Cass Saddle Agriculture Exchange Traded Fund (ETF) has had a strong start on the Zimbabwe Stock Exchange, gaining 32 percent in its first four trading sessions despite the current bear market.
ETFs are funds that track the performance of a specified security which include but are not limited to indices, commodities, currencies or any other asset. Ordinarily, these funds are open ended and unleveraged, meaning they are fully funded.

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Zimbabwe’s fifth ETF, which was introduced by Cass Saddle Asset Management last Thursday, tracks the Agriculture Index of the Zimbabwe Stock Exchange (ZSE).
The initial constituents of the fund include National Foods, British American Tobacco and Tanganda Tea Company.

“The benefits of ETFs include portfolio diversification, liquidity, and relatively lower management fees,” ZSE board chair Caroline Sandura said at the listing ceremony in Harare last week.

“The agriculture sector is well documented as being the pillar of the Zimbabwean economy… it is commendable that Cass Saddle picked this important sector.
“It is also commendable that despite the challenging macro-economic environment, we are witnessing one of the best years for the ZSE in terms of new listings,” she said.

Zimbabwe’s first ETF was introduced in December 2020 when Old Mutual Investment Group Zimbabwe (OMIG) posted seed capital for a fund in the form of scrip weighted according to the Zimbabwe Stock Exchange’s Top Ten Index. Units of the fund were subsequently listed on the local bourse in January 2021.
The second was Morgan & Co’s Multi-Sector Fund, which was the country’s first actively managed ETF.

An actively managed ETF has a manager or team making decisions on the underlying portfolio allocation instead of tracking the performance of a benchmark index, such as is the case with the OMIG fund. The third ETF was launched in March — Datvest’s Modified Consumer Staples Index ETF.

Analysts say the fund has simplified local investors’ access to defensive stocks, a welcome development for the growing retail investor community, which has limited ability to build sophisticated stock portfolios.

Consumer staples refers to a set of essential products used by consumers. This category includes items like food and beverages, household goods, and hygiene products as well as alcohol and tobacco. Then came Morgan & Co’s Made in Zimbabwe ETF, which is focused on the manufacturing sector.
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