Exchange traded funds: Foreign transactions increased 99.6% in second quarter

The Nigerian Exchange (NGX) Limited says foreign transactions in exchange traded funds (ETFs) rose by 99.64 percent in the second quarter (Q2) 2021 despite foreign exchange (FX) restrictions in the country.

This is contained in the NGX quarterly report for Q2 2021 for the period ended June.

ETFs refer to a type of security that tracks an index, sector, commodity, or other assets which can either be purchased or sold on a stock exchange.

According to the report, ten stock brokers drove 99.9 percent of total transaction value and 97.3 percent of total volumes of ETFs in Q2 2021.

It showed that ETF market capitalisation declined by 39.7 percent between the first two quarters of the year as the commodity-backed exchange-traded product (ETP) suffered net outflows of 54 percent, from N12.0 billion in Q1 2021 to N5.5 billion in Q2 2021, due to FX restrictions in the regulatory climate.

Also, trade volumes fell by 69 percent from about 5.3 million units in Q2 2020 to 1.6 million units in Q2 2021.

NewGold emerged as one of the most active in both value and volume traded in the ETF space, which traded 524.241 units valued at N4.41 billion.

Vetiva Griffin followed as it traded 501,48 units worth N8.12 million; Vetiva Industrial Goods transacted 248,469 units worth N4.52 million; Meristem Value ETF sold 115,58 units valued at N1.87 million; while Stanbic IBTC ETF traded 19,774 units valued at N1.48 million.

The report also showed that Renaissance Capital (RenCap) led in terms of brokers’ performance in value, having traded about 69.7 percent.

Rand Merchant Bank (RMB) ETF was next, accounting for 12.72 percent; while ABSA Securities accounted for 9.04 per cent of transactions.

Inversely, Vetiva led in terms of volume, accounting for 31.55 percent in Q2, followed by Rencap with 24.9 percent, while IONE accounted for 14.66 per cent volume of transactions.

The report added that investors remain positive on the gold-backed ETF as well as diversifying their investment portfolios with listed ETFs giving exposure to the NGX 30 index.