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Absa Capital Exchange Traded Funds

Absa Exchange Traded Funds: Absa Newgold, Absa Newrand

Absa NewGold Index

Absa Capital’s NewGold ETF (NewGold), the largest exchange traded fund (ETF) in South Africa, reached its latest milestone by exceeding 50 tonnes of gold bullion in assets. At current market rates, NewGold’s Net Asset Value is approximately R16.35bn or $2,1bn.

What are NewGold Gold Bullion Debentures?

NewGold Gold Bullion Debentures are securities backed by gold-bullion, listed on and traded through the JSE Securities Exchange. Each NewGold Debenture is initially valued at 1/100 of one fine troy ounce of gold.

NewGold Debentures are issued by NewGold Issuer Limited, a public company incorporated in the Republic of South Africa, Registration Number 2004/014199/06.

Proceeds of the issue of NewGold Debentures are utilised to acquire the gold bullion, in the form of 400oz London Good Delivery Bars.

  • Absa Capital, the investment banking division of Absa Bank Ltd, announced that the issuer of the NewGold Exchange Traded Fund (ETF), NewGold Issuer Limited, has appointed Brink’s Limited (Brink’s) as the safe custody custodian of NewGold’s gold bullion holdings. 
  • The reason for the change was the limitation in the safe custody capacity of the previous custodian, in light of significant increase in NewGold’s holdings of gold and the predicted continued growth of such holdings.
  • NewGold’s gold bullion has been transported to the safe vault premises of Brink’s in England where they have assumed physical control of the gold bullion with effect from 16 February 2009.
  • Brink’s is a global leader in business and security services serving banks, retailers, governments, mines, refiners, metal traders, diamantaires and jewellers through more than 800 facilities in 50 countries on 6 continents.

Benefits for the Investors:

  • Diversification of investment risk Research shows that an optimal investment portfolio should contain between 5% and 30% of gold, for different investors’ risk profiles.
  • Gold is a store of value - in the long term, gold price has outperformed inflation significantly
  • Long-term inflation protection
  • Investment in gold is a relatively low-risk investment: gold returns are significantly less volatile than the returns on gold equities and on par with the broad market
  • Gold is an excellent Rand hedge
  • Protection against US Dollar depreciation
  • Gold is a safe haven investment - as one of only a handful of financial assets not matched by a liability, it can provide ‘insurance’ against extreme movements on the value of traditional asset classes that can happen in unsettled times. Some examples include:
    • During the 1987 stock market crash, gold proved itself the most effective way of raising cash to meet immediate needs;
    • Flight to gold in 1999 due to Y2K fears;
    • In the first quarter of 2002, flight to gold by Japanese investors as they awaited the withdrawal of government guarantees on bank deposits.
  • Worldwide, the gold market is very liquid and deep: while the gold market is only some 13% of the size of the New York Stock Exchange by market capitalisation, its turnover to market capitalisation ratio is 3.4 times higher. In addition, trades of up to five tonnes have been executed without having any significant impact on price.

NewGold Performance (as at 30 September 2013)

NewGold ETF Performance history - JSE code: GLD
 
1 - Year
2 - Year
3 - Year
Since inception
Annualised return
-9.88%
2.45%
13.12%
19.56%
Fund Size
R17.808 bn
Source: *Calculated by Absa Capital
(past performance is not necessarily a guide to future performance)

Absa NewRand Index

The Absa NewRand Index is an equity index comprising 10 rand hedge shares selected from the FTSE/JSE Africa TOP 40 Index. The Index is created by ACMB and provided and calculated by the FTSE and JSE. The Index composition and calculation methodology was designed with an objective to maximize long-term correlation with the Rand/USD exchange rate.

What are some of the benefits of investing in NewRand securities?

  • Diversified exposure to quality companies listed on the JSE
  • Protection against possible depreciation of the Rand
  • A cost effective way of trading a basket of shares through a single transaction
  • Automatic portfolio rebalancing of the constituent holdings of the NewRand Index
  • It is possible to buy and sell NewRand securities at any time that the JSE is open for trade
  • It is easy to invest your money and simple to realize your investment
  • You can calculate the value of your investment at any time

For more information and how to apply click here:

Absa Capital New Funds:

 


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