New Gold Fund officially listed

Ghana Stock Exchange (GSE) has officially listed Absa Capital’s New Gold Exchange Traded Fund (ETF) on the local bourse with an initial offering split into 400,000 units, to test market demand.

South African group Absa Capital took the decision to list its gold-backed ETF on the GSE after the primary listing in South Africa and other listings on bourses in Nigeria and Botswana.

It is the first commodity-backed exchange-traded fund on the GSE, aimed at helping to broaden the range of securities on the bourse. It is the only gold-backed ETF on the continent, which is a simple and cost effective way of investing directly in physical gold bullion through a GSE listed share.

ETFs are securities traded on exchanges like shares, but track the combined value of a portfolio or basket of underlying assets such as shares, commodities and bonds.

New Gold, Africa’s largest ETF, is the best-performing ETF on the continent over five years with a return of 22.55 percent per year, a two-year return of 24.76 percent, and a return over three years of 21.66%. As at August 1, 2012, New Gold’s assets under management were US$2.15billion.

Dr. Sam Mensah, Chairman of Council of the GSE, made the official listing pronouncement and together with officials of the South African group Absa Capital rang the bell to signal its official admission to the trading platform in Accra.
 
Kofi Yamoah, Managing Director, GSE, explained that investors will be able to track the performance of the security once they know the gold price and dollar-cedi exchange rate.
 
“Besides, listing on the bourse will help diversify the stock exchange away from the equities and bonds that currently dominate it.”

 Mr. Yamoah added that the listing will deepen and broaden the security types that are available and traded on the bourse, and that the listing will also provide a learning platform for the development of other ETFs in future.

Dr. Vladimir Nedeljkovic, Head of Investments at Absa Capital, expressed hope that New Gold ETF will bring valuable additions to the country’s investment space.

 
“The introduction of Exchange Traded Funds to the GSE offers both individual and institutional investors a cost-efficient and convenient way to invest in multiple shares or other assets, such as commodities, through a single security,” he said.

“We have been encouraged by the success of the New Gold ETF in the African markets where it has been listed. Africa is an exciting proposition for this product, and we will continue to explore opportunities across the continent.

“The listing is in line with Absa Capital’s overall strategy to expand its suite of products and services in sub-Saharan Africa, said Dr. Nedeljkovic.”

Mr. Benjamin Dabrah, Managing Director Barclays Bank Ghana, said gold is a reliable store of value and the ETF will provide an avenue for investors seeking alternative investment products.

 “We are confident that the product will benefit the entire Ghanaian nation because it is a transparent product which offers value for money.

“ETFs provide investors with liquid and low-cost exposure to underlying commodities or other assets, and trade like a stock on an exchange.”

Patrick Kingsley-Nyinah, Director of Oak Partners speaking at media interaction on ETFs, said on the African continent ETFs have been in issuance since November 2002 with the introduction of Satrix 40, which tracks the top-40 companies on the Johannesburg Stock Exchange (JSE).

“After Absa introduced the New Gold ETF on the JSE in May 2004, it was subsequently cross-listed on the Botswana Stock Exchange in July 2010 -- the first ETF dual-listing in sub-Saharan Africa with a current net asset value of approximately US$2.5billion.”

Batsile Ngomane of Absa Capital, explaining the benefits of ETFs, said: “It offers benefits of diversification like a pooled investment vehicle and that of a stock’s tradability. ETFs can be sold short and margined, just like any other listed equity.

“In jurisdictions that charge capital gains tax, ETFs offer a tax-efficient structure due to their slow turnover and hence lower tax liability due from sales and realisation of capital gains.

 “Portfolios of ETFs are transparent and allow for the operation of arbitrageurs to keep the trading price as close as possible to the net asset value.”

Absa Capital, the corporate and investment banking division of the Absa Bank Limited and affiliate with Barclays Bank, is a leading South African corporate and investment bank with global reach, offering clients financing, risk management and advisory solutions in a wide range of currencies and structures across the globe.

Absa is a leading originator of exchange traded funds in the South African market, and has 48% of the market share based on assets under management.