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Global index provider, FTSE Group (FTSE), and the JSE, Africa’s premier exchange, today launched a new fundamentally weighted index, entitled FTSE/JSE RAFI 40, which will extend the FTSE/JSE Africa index range and create new investment opportunities. FTSE holds the exclusive rights to calculate and license the FTSE RAFI Index Series and is working in collaboration with the JSE to bring this exciting index to South Africa.
According to Ana Forssman, the JSE’s Senior General Manager, Information Products Sales Division: “The FTSE/JSE RAFI Index will be a non-market capitalization weighted index which will apply the fundamental indexationTM methodology developed by Research Affiliates. The index will contain the top 40 companies selected and weighted by four fundamental factors – sales, cash flow, book value and dividends - from the FTSE/JSE All-Share index. Share prices, which can be prone to speculation, will not be a component of the weights.”
Imogen Dillon Hatcher, Managing Director, Europe - FTSE Group, commented, "Internationally, the FTSE RAFI Series is proving a popular complement to many traditional cap weighted indexes, and is being used by an increasing number of asset owners worldwide as a diversification tool. By working in partnership with the JSE, FTSE can leverage its international expertise and brand recognition to create locally relevant index products for domestic investors in South Africa.”
The JSE and FTSE are also pleased to announce that, due to a high level of interest, licenses have already been awarded to track the index. Umbono Fund Managers, a boutique in Old Mutual Investment Group SA, has been awarded an exclusive license for a period of 18 months to create passive tracking funds to track the index. The first fund will be called the Old Mutual Umbono RAFI Tracker Fund.
Craig Chambers, Deputy MD of Umbono Fund Managers, said: “We are extremely pleased to have been awarded the exclusive license to manage the first FTSE/JSE RAFI tracker fund in South Africa. Globally, Fundamental Indexation has already attracted over R140bn in investments – across 35 countries – in the last 18 months alone. We are confident that the SA market will be no exception, and that our fund will prove to be an excellent core building block in investors’ portfolios.”
FTSE / JSE have also awarded a licence to create an Exchange Traded Fund to Satrix Managers (Pty) Limited and the intention is to list a Satrix product on this exciting new index to be called Satrix FTSE/JSE RAFI ETF, abbreviated as SATRIXRAF.
Mike Brown, General Manager, of Satrix commented, “Satrix is a well established provider of Exchange Traded Funds in South Africa, with six Satrix ETFs already listed on the JSE and we are looking forward to working with FTSE, the JSE and Research Affiliates in providing the South African investor with a novel product that ranks listed shares on purely fundamental performance related criteria. This index can be expected to provide returns largely non-correlated to other indices on the JSE, thereby offering an ideal way to diversify and enhance investment performance. ETFs are a low cost, easily accessed, transparent and liquid means of gaining exposure to an index based portfolio and are an optimal way to invest in this new RAFI index.”
