LISTED Exchange Traded Fund (ETF), Cass Saddle Agriculture (CSAG) anticipates an improved performance driven by expected better rainfall patterns, which it hopes will strengthen the balance sheets of its underlying portfolio companies.
CSAG debuted on the Zimbabwe Stock Exchange (ZSE) on July 15, 2022.
It invests in agriculture-related stocks, comprising nine agriculture-related companies listed on the ZSE.
According to the American financial and economic literacy website, Investopedia, an ETF is an investment fund that holds multiple underlying assets and can be bought and sold on an exchange, much like an individual stock.
ETFs can be structured to track anything from the price of a commodity to a large and diverse collection of stocks.
In a statement accompanying the fund’s financial statements for the period ending December 31, 2024, CSAG fund manager Calvin Mugabe expressed optimism about the ETF’s performance.
“Looking ahead, we anticipate improved ETF performance driven by expected better rainfall patterns and strengthened balance sheets among underlying portfolio companies. Enhanced ETF liquidity on the ZSE represents another positive catalyst,” he said.
“Agriculture’s fundamental role in Zimbabwe’s economy, combined with government initiatives to expand irrigable land through dam construction, provides a supportive framework for long-term growth.
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“These infrastructure developments will help insulate agricultural production from weather-related risks, particularly drought conditions.”
He acknowledged that the agricultural sector faced additional challenges from the El Niño weather phenomenon that brought about the drought conditions, which were affecting hydropower generation capacity.
“Resulting incessant power cuts forced agricultural operators to adopt expensive alternative energy solutions, negatively impacting sector earnings,” Mugabe continued.
“International soft commodity prices remained subdued, further constraining agriculture business profitability.”
As an agro-focused asset management company, he emphasised that the CSAG ETF remains central to their strategic objectives.
“As an agro-focused asset management company, the CSAG ETF remains central to our strategic objectives,” Mugabe said.
‘We continue to believe in channelling patient institutional capital into agriculture, aligned with the African Development Bank’s projection that Africa’s food and agribusiness sector will reach US$1 trillion by 2030.”
During the review period, the fund delivered a 44% return in real terms.
As of the report date, the ETF traded at a premium of 144%, reflecting strong investor demand.
To address this supply-demand imbalance, management plans to increase ETF liquidity through additional unit issuance.
The dividend for the year increased to ZiG5 153 from ZiG813 over the same 2023 period.
“Dividend income during the period came exclusively from tobacco companies TSL Limited (ZiG3 819) and British American Tobacco Zimbabwe ZiG1 335. The above stated tobacco counters have been the largest contributors to the fund’s dividend income,” Mugabe said.
“These tobacco stocks demonstrated defensive characteristics, showing resilience to economic cyclicality. In line with our investment strategy, all dividends were reinvested.”
Despite positive dividend, CASG posted a decrease in net income to ZiG150 161 during the period under review, from a prior comparative of ZiG968 840, attributable to unit holders.
The companies under the ETF, apart from TSL Limited and British American Tobacco Zimbabwe, include Hippo Valley Estates Limited, Seed Co, Dairibord Holdings Limited, Tanganda Tea Company Limited, CFI Holdings, Zimplow Holdings Limited, and Ariston Holdings Limited.
The fund has a market value of ZiG920 964.
