How'd the ETF perform?

In the year ended December 2021, the ZSE’s pioneer ETF successfully broke into the market by expanding the range of listed equities on offer in a hyperinflationary environment destabilised by currency concerns.

In the period under review, the ETF earned an inflation-adjusted ZWL435.55 million from investment income, with ZWL9.83 million coming in as dividend income. Operating expenses for year totalled ZWL11.54 million, an amount mainly composed of distribution costs to ETF unit holders as well as management fees incurred during the period under review.

Net income for the period was an inflation-adjusted ZWL331.57 million, the benchmark earnings for the year ahead. In terms of the ETF’s financial position, equity investment made-up 98.98% of assets and were valued at ZWL598.62 million.

FY-22 and beyond

By volume of shares invested in, Cassava outweighs Old Mutual’s basket of blue chip counters, but Econet’s superior market price (as of December 2021) makes the latter the most valuable component of the ETF. Econet and by extension Zimbabwe’s anticipated telecoms development and the role industry leading firms will play place a significant underlying value in counters like Econet, reaffirming its place in the ZSE’s top ten index and acting as a mid and long-term value preservation hedge in a volatile market.

Looking ahead, the continuation of suppressive trade mechanism on the ZSE will drive more “buy and hold” transactions, a strategy that favours composite equities such as ETFs, thereby accelerating demand over time. The inevitable supply constraints will pull prices up, making ETF purchase timing a profitable move in the long-run.