What you need to know about the new direct marketing guidance note
Nadine Mather and Chloë Loubser
Nedbank BGreen sees 10% increase in market capitalisation
The Nedbank BGreen ETF has made its mark as an important investment instrument, with market capitalization rising by more than 10% to around R111 million since its launch in December 2011. It was launched as a means for retail and institutional investors to invest, based on their green convictions and access to an investment that mirrors high levels of sustainability and responsibility.
It started with 33 companies from the JSE's Top 100 companies, which has grown to 43, comprising 11 additions and one company dropping out of the portfolio. These changes were due to the application of Nedbank's index methodology on the release of the latest Carbon Disclosure Project report for South Africa.
New constituents include Arcelor Mittal, British American Tobacco, Growthpoint Properties, Harmony Gold, Investec, MTN, Nampak, PPC, Spar group, Telkom and Wilson Bayly Holmes. Lonmin has dropped out.
Importantly, the ETF has a good spread of financial, resource and industrial shares, giving investors diversification that mirrors the South African economy.
According to Nedbank Capital's senior transactor, Jacoleen Simpson, the increase is a reflection of improving disclosure among South African companies, currently the second highest disclosure score in the world with 83% of Top 100 companies on the JSE meeting disclosure requirements.
"As at February 24, there were 54 investors in the ETF. However, there were significant trading volumes in March due to an advertising campaign and an investment roadshow," said Simpson.
"The ETF is always liquid as there is a market-maker providing both bid and offer prices in line with the net asset value of the fund throughout the trading day."
Commenting on its market acceptance to date, Simpson said there has been significant interest across a broad spectrum of investors, adding that many large investors have been in discussion with Nedgroup Beta Solutions to use the BGreen ETF in various investment portfolios.
"In addition, we have seen good interest from retail investors who invest through their stockbrokers or other trading platforms."
Independent analysis has shown that the outperformance of the Nedbank Green Index, compared to the general market, had been mainly due to stock selection, serving to debunk the myth that environmentally sustainable companies underperform.
"In fact, this shows that investors add value to their portfolios by investing based on environmentally sustainable principles. Local and international evidence suggests that companies that are more aware of the risks and opportunities in the green economy also outperform their peers."
On the back of this success, she said that Nedgroup Life has launched a guaranteed version of the ETF in the form of a Guaranteed ETF Plan, which provides alternative risk-return profiles for gaining exposure to investment in environmentally sustainable companies.
"Nedbank continues to explore opportunities to provide products for clients who share our values," she concluded.
