BSE says it will contribute to the growth of this market segment
Believes product will entice retail investors
The Botswana Stock Exchange (BSE) believes that the adoption of actively managed exchange-traded funds (ETFs) by the Botswana Public Officers Pension Fund (BPOPF), the country’s largest pension fund, will boost the uptake of this asset class.
Kopano Bolokwe, the BSE’s Head of Product Development, characterised the fund as an enabler that will “contribute to the growth of this market segment here in Botswana.”
Towards the end of last year, the fund issued an expression of interest to provide services for actively managing exchange-traded funds. The BSE believes that this move will stimulate the appetite for companies like Sygnia, Absa and many others to list this product on the BSE.
Bolokwe remarked, “It will contribute to an increase in the diversity of the ETFs that we now have.”
One of the actively managed ETFs he singled out is by Sygnia, which provides exposure to companies such as Microsoft, Netflix, and others.
An actively managed ETF is a listed investment product that offers exposure to a collective investment scheme (CIS) portfolio managed through an active investment strategy. In an actively managed ETF, a fund manager or team actively selects and manages the investments within the fund with the goal of outperforming a specific benchmark or index. They frequently buy and sell securities based on their analysis and market outlook.
Actively managed ETFs are different from passive ETFs because the latter typically track a specific index, sector, commodity, or other asset. Passive ETFs aim to replicate the performance of the chosen index rather than beat it like actively managed ETFs. In other words, unlike actively managed ETFs, ETFs generally follow a passive investment strategy, meaning they don’t involve active management decisions.
Bolokwe believes these products are crucial at this point in time, especially given the transition occurring in the pension fund landscape. He hopes that actively managed ETFs will be enticing not only to institutional investors but also to retail investors.
“What is also encouraging is that we are having conversations with other potential issuers, who are in turn having conversations with potential investors,” Bolokwe said, explaining that these investors expressed interest in actively managed ETFs being listed so they can deploy their savings effectively.
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