27four launches first AMETF on JSE, targeting sustainable growth

Source: South African Market Insights.

This listing initiates the group’s strategic plan to roll out four AMETFs, aimed at offering retail and institutional investors increased exposure to the country’s largest and most liquid companies.

The 27four Large Cap Equity AMETF is designed to achieve long-term, sustainable capital growth by investing in some of the largest and most stable companies listed on the JSE.

By managing risk effectively, it aims to minimise the impact of volatility in the markets while seeking to maximise returns. This strategy involves a careful selection of investments that closely follow the fund's benchmarks but allows for slight adjustments in sector allocation and investment style to capitalise on market efficiencies.

“We are excited to leverage technology and our expertise to make investing in companies accessible to everyone. With AMETFs, we are able to manage risk effectively and enhance returns, bringing high-quality investment opportunities to a broader audience,” said Daniel Page, head of Beta Solutions at 27four.

The listing of the 27four Large Cap Equity AMETF represents a crucial step in the firm's broader strategy to develop sustainable investment solutions that cater to the evolving needs of its clients.

"Innovative offerings like the 27four Large Cap Equity AMETF are crucial for enriching our investment landscape and advancing the growth of South Africa's local markets.

"Such ETFs provide investors with new opportunities to gain exposure to major companies, further enhancing the resiliency of our financial ecosystem and improving market access,” said Adèle Hattingh, business development and exchange-traded products manager at the JSE."

Diverse investment strategies

The 27four Large Cap Equity AMETF primarily invests in financially robust ordinary shares. It also has the flexibility to include high-quality preference shares, debenture stocks, bonds, and both secured and unsecured notes – all purchased at fair market values.

While the focus is predominantly on South African markets, the fund is also permitted to diversify by investing in select international markets, enhancing its potential for growth and risk management.

27four is scheduled to introduce three additional AMETFs that leverage quantitative, data-driven strategies. These funds will utilise advanced techniques such as style rotation and machine learning to adapt dynamically to changing market conditions and enhance investment returns.

The listing brings the number of ETFs available on the JSE to 102 with a market capitalisation exceeding R165bn.

The JSE continues to demonstrate its vital role in shaping South Africa’s financial landscape and its commitment to offering a diverse and robust platform for innovative investment products.