CAPE TOWN – Index-tracking product provider CoreShares has announced the launch of two new exchange-traded funds (ETFs) in the South African market. The CoreShares S&P 500 ETF and CoreShares S&P Global Property ETF will be available to local investors from early November.
Both products track indices that are not currently tracked by any other local funds. They therefore offer additional options to investors looking to make rand-based investments that track offshore markets.
It is particularly notable that CoreShares is the first to offer South African investors direct exposure to the S&P 500, which is the most referenced index in the world.
“The S&P 500 represents the very origins of index investing,” says CoreShares MD Gareth Stobie. “The very first index products ever put together were Vanguard’s S&P 500 funds.”
According to S&P Dow Jones Indices, over $7.8 trillion is benchmarked to the S&P 500, and more than $2.2 trillion is held in 73 different products tracking it.
While South African investors can already access the US market through the db x-trackers MSCI USA ETF, the S&P 500 does offer a slightly different exposure.
The MSCI USA index is slightly broader, with 620 constituents. Its largest sector exposures are to information technology (21.14%), financials (16.2%) and healthcare (14.64%).
The S&P 500 currently has 505 constituents, with its biggest exposures being information technology (21.4%), healthcare (14.7%) and financials (12.8%).
The second new fund, the CoreShares S&P Global Property ETF, will be the first local product to track an international listed real estate index. The fund references the S&P Global Property 40, which is made up of 40 large cap property stocks listed across the world.
The exposure is concentrated in developed markets, with half of the index constituents and around 57% of the index market cap based in the US. The rest of the constituents are listed in Japan, Hong Kong, Australia, Germany, France, the UK and China.
“We think offshore property is a great building block in a portfolio,” says Stobie. “And this index provides very good currency and share diversification.”
CoreShares has indicated that both products will have a targeted total expense ratio (TER) of between 0.55% and 0.65%. The headline fee for the CoreShares S&P 500 ETF will be 0.45% and for the CoreShares Global Property ETF 0.5%.
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