Ashburton Investments, the asset management arm of the FirstRand group, listed the Ashburton World Government Bond ETF at 9am on 13 March 2018.
The new Exchange Traded Fund (ETF) will track the Citi World Government Bond Index (WGBI) which invests in fixed-rate, local currency, investment grade sovereign bonds from over 20 developed and emerging market countries.
The JSE is the first exchange in the world to list the WGBI ETF and the new listing will for the first time give South African investors the opportunity to invest in global bonds on the JSE.
Samantha Schoeman, Head of Index Tracking at Ashburton Investments, said: "We had strong interest in the new ETF since the initial offering opened and we expect it to be popular with South African investors looking to diversify their portfolio holdings.
"It will provide retail and institutional investors with easy exposure to the world's bond markets in one low cost, tax efficient ETF."
The biggest holdings in the ETF are US government bonds at 33.6%, followed by Japan (19.7%) and France (8.4%). South African government bonds make up approximately 0.5% of the value of total holdings.
Schoeman added that bond investments are an essential part of balanced portfolios and like share investing, it is prudent for South African investors to hold international bonds alongside local ones to benefit from diversification.
"To date South African investors have had limited choice when it comes to bond ETFs but the launch of the Ashburton World Government Bond ETF will go a long way to redress the imbalance between scarce bond ETFs and the many equity ETF offerings on the JSE," she said.
The current yield on the ETF is approximately 1.4%. Distributions of income will be made quarterly. The listing will be in South African rand and local investors will not have to use offshore allowances to invest in the ETF.
The minimum subscription amount is R5 000 and in increments of R1 000 thereafter. There is no upper limit.
The targeted Total Expense Ratio is expected to be between 0.40% and 0.45%.
