Interview of Gareth Stobie, the Managing Director of CoreShares

Gareth Stobie, the Managing Director of CoreShares, gave us an exclusive interview where he talked on the listing of the CoreShares S&P 500 ETF and CoreShares S&P Global Property ETF on both the SEM and JSE.

CoreShares, a leading passive investment management business in South Africa has launched two Exchange Traded Funds on the primary market of the Stock Exchange of Mauritius namely the CoreShares S&P 500 ETF and CoreShares S&P Global Property ETF.  These are first ETFs tracking these S&P Dow Jones indices, across the African region, to be listed on the SEM. These ETFs have also been successfully listed on the Johannesburg Stock Exchange.

  1. The rise of ETFs and passive investment have been quite spectacular over the past decade especially in the US and EU markets, do you think it has the potential to pick up in Africa?

Very much so, Exchange Traded Funds have simplified the global mutual fund industry and have broadened the access. There are a number of factors driving demand:

  • Low cost – index funds tend to be less than a 1/3 of the cost of actively managed CIS or mutual funds
  • Performance – very few active investors (often less than 20%) are able to outperform the index over extended periods
  • ETFs are also highly transparent with excellent governance making them popular with regulators

According to ETFGI: ETFs/ETPs listed globally gathered a record amount of net inflows US$389.34 Bn in 2016 surpassing the prior record of US$372.27 Bn gathered in 2015. ETFs/ETPs assets reached a new high of 3.55 trillion US dollars at the end of 2016. Accordingly, global growth in this product type remains robust.

  1. The ETFs that you have launched are tracking one of the most famous indices in the world, the S&P 500; can you tell us more about these ETFs?

The S&P 500 index is without doubt the most recognized index in the world and represents the very origins of index investing. The index boasts very broad exposure to the US and global economy. Up until now the index hasn’t been available in ETF format on any African exchanges – this iconic investment strategy is now readily available in USD on the Stock Exchange Mauritius (SEM) to local Mauritian investors and in ZAR on the Johannesburg Stock Exchange (JSE) for South African investors.

The CoreShares S&P Global Property ETF tracks the S&P Global Property 40 Index, an index that tracks the performance of the 40 largest listed property stocks globally. The Global Property ETF has over 55% allocated to the US and exposure to 7 other developed regions and therefore offers good diversification benefits.

Both ETFs are competitively priced and are the first of their kind to list on the SEM.    

  1. Why have you decided to do the primary listing on the Stock Exchange of Mauritius?

Mauritius allowed us to list a product in USD which the local SA (JSE) market doesn’t yet facilitate. The market is ‘close to home’ and was relatively affordable with excellent service standards – making numerous aspects to the project manageable. Mauritius also meets a high governance framework which we were comfortable with.

  1. The Stock Exchange of Mauritius has the ambition to become one of the leading exchanges on the region. What are your views?

Mauritius is already attracting a number of new listings and I am sure this will continue.  I believe Mauritius could have a competitive advantage as relates to: service excellence, technology, robust governance and corporate affairs. Mauritius is not traditional know as a market with deep capital markets but there are a number of other areas where one can excel as an exchange and as a trading hub generally.