FIRST Mutual Holdings Limited (FHML) is set to list the first Gold Exchange Traded Fund (ETF) on the Victoria Falls Stock Exchange (VFEX) to track gold assets and mining shares listed on the Johannesburg Stock Exchange (JSE).
The listing, expected to take place during this second half, comes after the firm attained regulatory approvals.
Such a listing comes at a time when gold prices are experiencing record highs of over 40% year to date.
During the group’s annual general meeting (AGM), FHML group chief executive officer Douglas Hoto said the ETF would go for shares that were invested in gold, and particularly those listed on the JSE.
The JSE is domiciled in South Africa.
“First, the gold ETF product, First Mutual Wealth Gold Exchange Traded Fund approved. The fund tracks gold assets and gold mining shares that are listed on the JSE. The fund is expected to be listed on the VFEX during H2 2025,” Hoto said.
“In particular, we are looking at shares that are listed on the Johannesburg Stock Exchange, then we will list that ETF on the VFEX.
“So, we get money, the initial amount, which we have allocated from shareholders to go and buy JSE-listed shares that are in the gold sector, and we will list our ETF.”
- Currency crisis haunts listed firms
- Currency crisis haunts listed firms
- Pension funds generate US$29 million
- Caledonia to restart key Bilboes operation
Keep Reading
On the sidelines of the AGM, First Mutual Wealth general manager Thomas Mutswiti said from an ETF perspective, the firm considered the fact that local investors would want to hedge.
This, he added, could assist in addressing the externalising worry from investors that they would not be able to repatriate their funds outside Zimbabwe after investing locally.
He explained that the ETF was composed of assets on the JSE because the group did not want to have direct holding of gold, which could come with other complications.
“But it took much longer because of the regulated processes. Luckily, we did get the exchange control approval on March 1 and it’s now in place. So, the whole idea behind this product is let’s just go back to the basics of gold. Traditionally, it’s a hedging, an alternative to monetary assets,” Mutswiti said.
“So, the idea was there’s upside for gold in terms of the risk of assets. You tend to see that when there tends to be negative correlation, when everyone’s running away from the market. If you look globally, the gold price tends to go up because it’s a hedging asset.”
He revealed that there was also an ETF listed on the JSE.
“So, it’s 50% on an ETF and then 50% listed gold assets. If you go to JSE, you’ll probably know that,” Mutswiti said.
From a cash flow perspective, he said traditionally, gold does not give one any income, outside of capital appreciation.
Thus, buying listed gold counters, and even listed ETFs, is to improve cash flow after the declaration of dividends.
“You can still have your capital gain when people just do the regular trading. But there’s an added benefit that if a dividend is declared, by the underlying assets, you can then be able to distribute that to investors,” Mutswiti said.
“So, naturally, with investment markets, there’s always volatility. And it’s that volatility that you want to play on. That’s why I was saying, if you look, we started this product before even the gold price was around US$1 800 (per ounce).
“It’s just that there’s been too much of a time lag before we could launch it. But it’s that volatility that we then want to be able to just play into.”
