SIMON BROWN: I’m chatting now with Siyabulela Nomoyi, quantitative portfolio manager at Satrix. Siya, I appreciate the early morning time. You’ve got an Indian ETF, currently an IPO listing later this month. [It’s] certainly a first for South Africans, getting exposure to India. We’ve had a little bit in some of the other ETFs, but… people have always been saying: ‘How do we get India?’ This really brings a nice elegant and easy solution to the question.
SIYABULELA NOMOYI: Thanks for having me, Simon. Yes, we have listed. We’ve got the Satrix MSCI India ETF, which opened on Monday. The IPO closes on Tuesday, February 15 and the actual listing would be on February 24. And quite right; in terms of exposure [to India] there is some in some of the emerging market ETFs. In the top five there’s about 12%.
But this one is for an investor who’s looking for a country exposure like India, and also you’re going to get the same stocks that you get from the emerging market, which is the 12%, but now you’re going to get them at their full weight. So it’s quite a good one to look at if you’re looking at diversifying your portfolio.
SIMON BROWN: Certainly, as I said, it’s one that is undoubtedly the ETF for the region that I get asked about the most often. Is this a trend we might start seeing in terms of new ETFs coming to market, where we get regional or country–specifics? An investor can almost do their building blocks. As you say, it’s around 12% in the emerging–market one, but now suddenly they can say, well, actually I want more exposure and put it as a bolt–on to boost up regions.
SIYABULELA NOMOYI: Yeah. I think it is, especially if you’re looking at the emerging market side, because if you’re looking at international exposure, you tend to have ETFs which are more exposed to the north side . If you are looking at exposure in the East, and mostly the emerging markets, that’s where people will tend to try and see if they can get country exposure.
If you’re looking at the valuations now of emerging markets versus developed markets, you would argue that emerging markets come out as much cheaper when compared to markets like the US, which have stocks that are trading at record high valuations.
Look at what happened now in January.
SIMON BROWN: Absolutely. Hello Meta Platforms, or Facebook as we probably know them better. [It’s] currently an IPO. The key benefit of the IPO is that obviously there are no fees involved. So you say, I want X rand, and there’s not going to be any transaction fee. Importantly, because this is an IPO for an ETF, I would get full allocation, and then there’s not going to be a pop–on listing, because you can fill that allocation. The question everyone’s been asking me is how would the price of the ETF be determined for that listing?
SIYABULELA NOMOYI: Exactly. When you get into an IPO, the benefit of getting into an IPO is to avoid the fees when it’s starting; you are also right in front of the queue when it actually lists on the February 24. So what’s going to happen now [is that] on the 18th the results of the IPO will be announced. That’s when we collect all the investments generated from the IPO, and then using that total the price will be determined. It’s not going to be announced now, because the IPO is still open. That only comes up before the listing. So we’ll see when we actually get the pricing.
SIMON BROWN: Yeah. If it was a stock, we could know a price, but of course we don’t know what the underlying ETF will be at that particular point.
We’ll leave it there. Siyabulela Nomoyi, quantitative portfolio manager at Satrix, I appreciate the time.