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South Africa’s Prescient lists income ETF: AMETF

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South Africa’s Prescient Investment Management has launched an ETF aimed at income-focused investors, stockbrokers and financial advisers: the Prescient Income Provider Feeder Actively Managed ETF (AMETF) on the Johannesburg Stock Exchange (JSE).

The firm writes that the fund is suitable for investors seeking stable real returns and aiming to maximise income via exposure to primarily the South African Money and Bond markets. The fund aims to return CPI + 3 per cent per annum through a full interest rate cycle while providing stability by aiming never to lose capital over any rolling three-month period.

Investors and financial advisers alike are going into 2024 with concerns around elevated interest rates, inflation and concerns around a global economic slowdown impacting investments. Income-focused investments will be a key component for preserving and growing investor wealth, the firm says.

“Our Actively Managed ETF is specifically designed for investors seeking stable, short- to medium-term real returns. It strategically targets the maximisation of income via a diverse range of fixed income assets, including money market instruments and bonds, to deliver on its mandate,” says Henk Kotze, Head of Cash & Income at Prescient Investment Management the portfolio manager for the Fund.

The firm writes that Actively Managed ETFs are becoming increasingly popular tools for investors and financial planners both locally and globally as they combine the cost-efficiencies of an ETF with the potential for outperformance.  The market capitalisation of AMETFs on the JSE now exceeds ZAR1.7 billion and highlights the growing popularity of these tools.

The Prescient Income Provider Feeder Actively Managed ETF is a multi-asset portfolio, where its investment strategy is multifaceted, focusing on a diversified portfolio of income-generating assets. These include preference and listed property shares, interest-bearing stocks, and various financial instruments, with flexibility to invest in both local and offshore markets. The AMETF therefore aims to deliver returns which are typically higher than what can be achieved via money market funds.

The performance of the AMETF is anticipated to be driven by a combination of strategies to achieve its intended returns, including interest rate adjustments, yield enhancement through credit instruments, asset allocation, offshore exposure, and the use of derivatives.

“The listing of this AMETF reflects our commitment to meet the growing demand for actively managed investment solutions within South Africa,”says Kotze.

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