ETF Market Capitalization Grew by 0.91% in October 2017

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The ETF market capitalization grew by 0.91% in October to kick off Q4-2017, closing at N6.44 Billion (up from September levels at N6.38Billion).

YTD Dashboard as at October 2017

No of ETFs

9

Market Capitalization (N’Mn)

6,444

Deals

345

Volume

59,913

Value (N’Mn)

449

Proshare Nigeria Pvt. Ltd.

Market Activity Review

In the period under review, the Vetiva S&P Bond ETF, Stanbic ETF 30 and Vetiva Griffin 30 ETF were the most actively traded – cumulatively representing 99.5% of total value traded. The Bond ETF continues to enjoy market attention as yields in the underlying Fixed Income Market decline. The ETF’s benchmark – the S&P Nigeria Sovereign bond index – has recorded an 18.96% increase YTD.

ETF

Oct-2017

Jan to Oct

INDEX

Oct-2017

Jan to Oct

VETGOODS

-1.94%

28.71%

NSECNSMR

-0.33%

28.92%

STANBICETF30

-3.85%

27.89%

NSE 30

3.28%

40.19%

LOTUSHAL1

1.71%

20.34%

NSELOTUS

3.36%

25.07%

SIAMLETF 40

0.00%

35.19%

NSE Pension

4.70%

57.90%

VETGRIF30

3.39%

39.92%

NSE 30

3.28%

40.19%

VS&P BOND

-4.16%

7.66%

S&P BOND

5.01%

18.96%

VETBANK

4.28%

65.36%

NSEBNK

5.33%

69.05%

VETINDETF

2.36%

26.85%

NSEINDUST

2.24%

27.06%

NEW GOLD

0.00%

50.38%

GOLD

-1.01%

9.58%

Proshare Nigeria Pvt. Ltd.

On a M-o-M basis, trade values recorded in the ETF market grew 15x, albeit darfing June value traded Figures.

An assessment of the leader board puts the ratio of gainers to losers at 4:3, whilst 2 ETFs closed flat. The baking ETF, Vetiva Griffin 30 ETF (which tracks the 30 most capitalized stocks), industrial goods ETF and the Lotus Halal ETF gained 4.28%, 3.39%, 2.36% and 1.71% respectively.

Also noteworthy is the YTD growth of the Banking and Newgold ETF with recorded gains of 65.36% and 50.38% respectively.

ETF Application in a Core Satellite Strategy

ETFs simply and easily provide diversification benefits as they provide cost-effective, instant and liquid exposure to different markets, asset classes and strategies.

Investors can adopt a core satellite strategy wherein a portion of the portfolio (the “core”) is exposed to various passive outlets or index trackers e.g. Equity or Fixed Income ETFs; and additional positions (satellites) are added to the portfolio in the form of actively managed investments such as stocks, bonds, factor ETFs, mutual funds. The combination of this passive, low-cost indexed “core” and the higher-cost actively managed assets produce diversified portfolios with a higher risk/return potential and reduced portfolio volatility.

For illustrative purposes, the Equities Market Cap, Sector and Bond ETFs listed on The Nigerian Stock Exchange can be utilized as core components of a portfolio whilst diversification benefits can be derived from the Pension, Halal and Commodity ETFs, vice versa.

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