MARKET CAPITALISATION OF ETFs AND ETNs NOW EXCEEDS R33 BILLION Mike Brown, etfsa.co.za 10 January 2011 The market capitalisation of Exchange Traded Funds (ETFs) and Exchange Traded Notes (ETNs), listed on the JSE, grew by 21 percent in 2010, increasing from R27,5 billion at the end of 2009 to R33,3 billion by end 2010 (see attached Schedule A). The following Table 1 lists the market cap by product issuer. Absa Capital (NewFunds) continues to be the top provider of Exchange Traded products, measured by market capitalisation. However, NewGold ETF, which gives direct exposure to physical gold bullion through a listed security on the JSE, accounts for some 93 percent of funds held in Absa Capital ETF products, which indicates far less market acceptance for the other seven ETFs listed by NewFunds.. Satrix Managers, the second largest issuer of ETFs, has a broader range of successful ETF products. Although Satrix 40 (market cap R6,6 billion) is still the dominant product in the Satrix range, the Satrix DIVI grew solidly in 2010 to become the second biggest product in the stable, helped by its excellent price performance over the past three years. Table 1 Market Capitalisation (end 2010) ETF and ETN Issuer 2009 2010 % Change Absa Capital 15 027,4 16 480,8 10% Satrix Managers 9 966,7 10 734,2 8% Stanlib - 2 481,6 - Deutsche Bank 1 168,5 1 270,1 8% BIPS 905,3 1 120,1 23& Standard Bank - 464,9 - Investec 205,4 428,3 108% Proptrax 260,9 317,1 21% Nedbank Capital - 36,5 - TOTAL 27 534,2 33 333,6 21% Source : I-Net Bridge/JSE Mike Brown, Managing Director of etfsa, comments 2010 was the third year in a row of solid growth in the ETF industry. There are now 31 listed ETFs and ETNs, with 9 companies registered to issue exchange listed products. The growing number of ETF issuers, notably amongst the investment banks, indicates that new product offerings and innovations should be a feature of 2011 and beyond. The industry currently, or shortly will, covers all asset classes and offers a consistently widening selection of investment choices. It is likely that ETFs, by offering greater product choice, will become increasingly competitive with actively managed funds in the South African marketplace. 1
New Capital Raised in 2010 (see Schedule B) The 21 percent rise in market capitalisation is partly because of the continued recovery in the JSE (the All Share index rose by 16%, excluding dividends in 2010), but also because of new capital raised, either through the issue of additional securities by ETFs already listed on the JSE, or through new listings. In total, R2 292 million in new capital was raised in 2010 by new issues of ETFs or ETNs on the JSE. The most successful new issuer was Stanlib, which commenced its registration by the FSB as a licensed Collective Investment Scheme provider of ETNs, by issuing two products, Stanlib Top 40 and Stanlib SWIX, which raised R2,4 billion in new capital. Both Absa Capital and Satrix delisted securities in 2010, presumably as a result of some profit taking by investors. Table 2 New Capital Raised in 2010 ETF and ETN Issuer Stanlib 2 436 Standard Bank 447 Investec 210 Deutsche Bank 166 BIPS 121 Nedbank Capital 33 Proptrax - Satrix (571) Absa Capital (550) TOTAL 2 292 Source: I-Net Bridge/JSE Mike Brown comments the steady growth of the ETF and ETN industry last year in market cap and new capital raised was a further step in the development and acceleration of passively managed exchange listed products. Of particular interest is the continued growth in the value of securities traded, as shown below, as this gives evidence of the growing depth of the industry. Since 2005, when R7,5 billion ETFs were traded on the JSE, the annual values traded have now quadrupled to R33,5 billion in 2010. Table 3 Values of ETFs Traded Annually on JSE 2005 2006 2007 2008 2009 2010 7 550,5 18 160,9 14 806,3 28 569,2 31 375,9 33 428,8 Source : I-Net Bridge/JSE Terms and conditions: Redistribution, reproduction, the resale or transmission to any third party of the contents of this article and this website, whether by email, newsletter, internet or website, is only possible with the written permission of etfsa. etfsa, its sponsors, administrators, contributors and product providers disclaim any liability for any loss, damage, or expense that might occur from the use of or reliance on the data and services provided through this website. 2
SCHEDULE A ABSA ETFs and ETNs MARKET CAPITALISATION End 2008 End 2009 End 2010 NewGold 7 078,1 13 966,4 15 459,3 NewRand 510,6 726,5 632,0 NewSA 46,2 86,9 98,3 Shari ah Top 40-34,1 38,9 erafi TM Overall 397,4 131,6 156,6 erafi TM INDI 25-27,6 35,6 erafi TM FINI 15-22,7 24,9 erafi TM RESI 20-31,6 35,2 BIPS Sub-Total 8 032,3 15 027,4 16 480,8 BIPS Top 40 201,7 407,9 496,1 BIPS Inflation-X - 497,4 624,0 Deutsche Bank Sub-Total 201,7 905,3 1 120,1 DBX Euro 460,0 390,2 303,3 DBX UK 336,6 331,2 311,8 DBX US 119,9 141,0 169,5 DBX Japan 96,7 122,3 152,1 DBX World 133,5 183,8 333,4 Investec Sub-Total 1 146,7 1 168,5 1 270,1 zgovi 125,6 205,4 428,3 Nedbank Capital Sub-Total 125,6 205,4 428,3 BettaBeta EWT 40 36,5 Proptrax Sub-Total 36,5 Property Tracker 243,4 260,9 317,1 Satrix Sub-Total 243,4 260,9 317,1 Satrix 40 4 405,3 6 344,9 6 637,6 Satrix INDI 469,95 598,3 635,2 Satrix FINI 812,5 1 063,7 827,1 Satrix RESI 405,0 535,7 422,9 Satrix SWIX Top 40 107,2 268,9 721,9 Satrix DIVI 370,0 693,5 927,9 Satrix RAFI 123,1 461,7 561,6 Sub-Total 6 693,0 9 966,7 10 734,2 3
End 2008 End 2009 End 2010 Standard Bank ETNs Gold-Linker - - 107,3 Silver-Linker - - 76,6 Platinum-Linker - - 205,4 Palladium-Linker - - 75,4 Sub-Total - - 464,9 Standard Liberty Stanlib 40 - - 270,3 Stanlib SWIX 40 - - 2 211,3 Sub-Total - - 2 481,6 Grand Total 16 442,7 27 534,2 33 333,6 Source: I-Net Bridge/JSE. 4
SCHEDULE B ETFs and ETNs NEW CAPITAL RAISED Estimated New Capital Raised from New Issues 2009 Jan-Mar 2010 Apr-Jun 2010 Jul-Dec 2010 2010 ABSA NewGold 7 124 (992) 126 504 (360) NewRand 56 (40) - (150) (190) NewSA - - - - - Shari ah Top 40 - - - - - erafi TM Overall (280) - - - - erafi TM INDI 25 23 - - - - erafi TM FINI 15 20 - - - - erafi TM RESI 20 24 - - - - Sub-Total 6 967 (1 032) 126 354 (550) BIPS BIPS Top 40 (45) - 24-24 BIPS Inflation-X 135 26 20 51 97 Sub-Total 90 26 44 51 121 Deutsche Bank DBX Euro (52) - - - (52) DBX UK - - - - - DBX US 40 48-48 48 DBX Japan - 14-14 14 DBX World 48 54 51 51 156 Sub-Total 36 116 51 167 166 Investec zgovi 37 (40) 49 201 210 Nedbank BettaBeta ENT40-33 - 33 Proptrax Property Tracker - - - - - 5
2009 Jan-Mar 2010 Apr-Jun 2010 Jul-Dec 2010 2010 Satrix Satrix 40 546 (248) (98) (50) (396) Satrix INDI - (88) - - (88) Satrix FINI 54 (40) (228) (55) (323) Satrix RESI - (96) - (50) (146) Satrix SWIX Top 40 96 10 702 (379) 333 Satrix DIVI 174 (75) 46 75 46 Satrix RAFI 202 (91) 248 (160) 3 Sub-Total 1 072 (628) 670 (619) (571) Standard Bank ETNs Gold-Linker - - - 108 108 Silver-Linker - - - 64 64 Platinum-Linker - - - 211 211 Palladium-Linker - - - 64 64 Sub-Total - - - 447 447 Standard Liberty Stanlib Top 40 - - - 226 226 Stanlib SWIX 40 - - - -2 210 2 210 Sub-Total 2 436 2 436 GRAND TOTAL 8 202 (1 515) 940 2 870 2 292 Source: I-Net Bridge/JSE. Terms and conditions: Redistribution, reproduction, the resale or transmission to any third party of the contents of this article and this website, whether by email, newsletter, internet or website, is only possible with the written permission of etfsa. etfsa, its sponsors, administrators, contributors and product providers disclaim any liability for any loss, damage, or expense that might occur from the use of or reliance on the data and services provided through this website. 6