• Morgan & Co Multi Sector ETF ended 2025 with NAV of ZWG24.18 million, down 68% from ZWG75.25 million, after ZWG54.61 million in redemptions wiped out most of its asset base
  • The fund remained profitable on portfolio performance, posting ZWG13.35 million in net income, driven by ZWG12.24 million in fair value gains and ZWG1.36 million in dividend income
  • Auditors flagged going concern risks as shrinking AUM, weak market liquidity and lower sponsor support left the fund operating close to or below a sustainable cost base

Harare- The Morgan & Co Multi-Sector Exchange Traded Fund has ended 2025 with a Net Asset Value of ZWG 24.18 million, down from ZWG 75.25 million twelve months earlier. That was a 68% collapse in fund size within a single financial year, and its auditors have flagged the NAV decline, market illiquidity, and changes in sponsor support as conditions that raise serious questions about the fund's future.

The striking thing, when you read the statements carefully, is that the fund actually made money. Net income on a historical cost basis was ZWG 13.35 million in 2025, a positive return year driven by ZWG 12.24 million in fair value gains on the equity portfolio and ZWG 1.36 million in dividend income. The investment case held up, and the fund did not lose value on its portfolio. What it lost was almost its entire investor base, and those are not the same thing.

The statement of changes in net assets recorded redemptions of ZWG 54.61 million in 202, against zero redemptions prior year. In a single year, unit holders representing the overwhelming majority of the fund's capital submitted redemption applications and were paid out. Units in issue fell from 1,043,403 to 169,297 on a historical cost basis, a reduction of 83.8%. The fund shrank not because it lost money, but because the money walked out the door.

At the start of 2025, First Mutual Holdings Limited was valued at ZWG 52.35 million,  representing 84.2% of the fund's entire equity portfolio of ZWG 62.15 million. By year end, that position had been reduced to zero. A fund marketed as Multi-Sector and described in its prospectus as providing a medium risk profile by spreading investments over several sectors of the economy was, in practice, 84% concentrated in a single financial services counter. The "multi-sector" label and the actual portfolio construction were telling two different stories.

What happened next is how ETF redemptions mechanically work. When the dominant unit holder submitted their redemption application, the fund transferred the underlying securities in proportion to their share of net assets,  meaning First Mutual Holdings shares left the fund in the hands of the departi

The ZWG 54.49 million in securities transferred out under the redemptions line in the investments reconciliation is that position exiting. The genuinely diversified portfolio visible at 31 December 2025,  Econet at ZWG 7.37 million, Zimre Holdings at ZWG 10.25 million, Old Mutual at ZWG 2.78 million is not the product of deliberate rebalancing toward diversification. It is what remained after the concentrated anchor holding was redeemed out.

The fund charges 0.5% per annum in management fees, 0.1% in trustee fees, and 0.05% in custodial fees on assets under management. At ZWG 75 million, those rates generated meaningful revenue. At ZWG 24.18 million, the same rates produce approximately ZWG 157,000 in annual fee income. The audit provision sitting on the balance sheet is ZWG 77,942. Publication expenses in 2025 were ZWG 172,000. A fund generating ZWG 157,000 in fee income while carrying a ZWG 172,000 publication expense line is not operating comfortably above its cost base. It is operating below it.

The decision not to declare a dividend for the second successive year is framed as a reinvestment decision, and at one level it is. But a fund with 169,297 units outstanding, ZWG 597,000 in cash, and a going concern note cannot afford to distribute assets it may need to meet further redemption applications. The no-dividend decision is also a liquidity preservation decision, whether or not it is characterised that way.

What the fund still has going for it is its actual investment performance. A 17.7% return on opening AUM in 2025, generated cleanly through fair value gains and dividend income rather than through accounting adjustments, is a positive signal about the portfolio management capability of TN Asset Management. Econet and Zimre have delivered the bulk of the fair value uplift, and the shift toward money market instruments, a ZWG 1.53 million position that generated ZWG 224,000 in interest income, shows active portfolio adjustment to the environment rather than passive drift.

The binary read for any investor considering the fund from here is reasonably clear. If new AUM flows into the vehicle,  whether from institutional investors attracted by the positive 2025 return record, or from the sponsors rebuilding their position, the fee income recovers, the cost structure becomes viable, and the fund's going concern uncertainty resolves itself. If inflows do not materialise and remaining unit holders continue to redeem, the fund approaches the point at which its costs exceed its fee income permanently, and the question of whether to wind it up supersedes any discussion of investment strat

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