FTSE/JSE awards licenses for FTSE/JSE RAFI 40, a new fundamental weighted
JOHANNESBURG, 1 OCTOBER 2007. - 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 40 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, which will see Satrix Managers (Pty) Limited list a new product on this exciting index to be called Satrix FTSE/JSE RAFI, abbreviated to 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.”
About JSE Limited
As South Africa's only full service securities exchange, the JSE connects buyers and sellers in four different financial markets, namely equities, equity derivatives, agricultural derivatives and interest rate instruments. The JSE Ltd offers the investor a truly first world trading environment, with world class technology, surveillance and settlement in an emerging market context. It is amongst the top 20 largest equities exchanges in terms of market capitalisation in the world.
For further information, please visit www.jse.co.zaAbout FTSE Group
FTSE Group is a world-leader in the creation and management of indexes. With offices in Beijing, London, Frankfurt, Hong Kong, Madrid, Paris, New York, San Francisco, and Tokyo, FTSE Group services clients in 77 countries worldwide. It calculates and manages the FTSE Global Equity Index Series, which includes world-recognized indexes ranging from the FTSE All-World Index, the FTSE4Good series and the FTSEurofirst Index series, as well as domestic indexes such as the prestigious FTSE 100. The company has collaborative arrangements with the Athens, AMEX, Cyprus, Euronext, Johannesburg London, Madrid, NASDAQ and Taiwan exchanges, as well as Nomura Securities, Hang Seng and Xinhua Finance of China. FTSE also has a collaborative agreement with Dow Jones Indexes to develop a single sector classification system for global investors.
FTSE indexes are used extensively by investors world-wide for investment analysis, performance measurement, asset allocation, portfolio hedging and for creating a wide range of index tracking funds. Independent committees of senior fund managers, derivatives experts, actuaries and other experienced practitioners review all changes to the indexes to ensure that they are made objectively and without bias. Real-time FTSE indexes are calculated on systems managed by Reuters. Prices and FX rates used are supplied by Reuters.
About Research Affiliates, LLC
Research Affiliates (“RA”) is a global leader in innovative investing and asset allocation strategies. The firm is well-known as the inventor of the Fundamental Index® concept. Developed to address the structural return drag created by traditional capitalization-based strategies, the Research Affiliates Fundamental Index® (RAFI®) strategies select and weight securities for the indices by objective accounting measures of company size (sales, cash flow, book value and dividends). More information on the Fundamental Index® methodology is available at www.researchaffiliates.com.
Leveraging its strong research focus, RA distributes products in partnership with some of the world's leading financial institutions globally. FTSE has partnered with Research Affiliates to create the FTSE RAFI® index series and has the exclusive right to license products based on these indices.
Founded in 2002, by Robert Arnott, former editor of the Financial Analysts Journal and renowned innovator in investment theory and practice, RA operates from its base in Pasadena, California. Over $27 billion in assets are managed worldwide using investment strategies developed by Research Affiliates.
About Umbono Fund Managers
Launched in 2001, UFM is a focused quantitative investment house that specialises in equity and bond tracker and enhanced tracker solutions. Funds under management currently total just over R13bn. Black economic empowerment (BEE) has always been a significant contributor to UFM's core values. Since its launch, UFM has exhibited an exemplary BEE track record. Employment equity has exceeded 75%, black brokerage allocation has exceeded 50% and UFM's education initiative – the IEDT Trust Fund – has awarded many scholarships to underprivileged learners. UFM targets clients that require a low cost, low risk “core” fund manager to complement their more aggressive, active, fundamental satellite portfolios. UFM's strong client base includes parastatal, private sector and multi-management institutions.
For further information, please visit www.umbonofundmanagers.com or contact Craig Chambers on (011) 562-6000.
About Satrix Managers (Pty) Limited
Satrix Managers is a registered Collective Investment Scheme (CIS) that lists the participatory interests in its CIS portfolios on the JSE as Exchange Traded Funds (ETFs). ETFs offer investors the convenience of investing in the entire basket of shares making up a FTSE/JSE index, through a single purchase of a security listed on the JSE. The Investor saves on the cost of purchasing the index basket shares separately and is also not liable for the payment of UST. ETFs also offer physical delivery of the underlying basket of index tracking shares on exchange for the ETF security and in this way ensure very little tracking error.
There are currently six Satrix products listed on the JSE, including the Satrix 40, Satrix Fini, Satrix Indi, Satrix Resi, Satrix Swix Top 40 and the Satrix Divi. The last product was listed very recently at the end of August 2007, and was the first instance of an ETF, based on fundamental indexation criteria, available in South Africa. It has proved to be extremely popular with the retail investment population.
Satrix products have a total market capitalization of over R 7 billion and some 50 000 individual investors are registered owners of Satrix ETFs, making this one of the fastest growing retail products on the South African market.
Deutsche Securities and Sanlam Investment Management each have a 50% shareholding in Satrix Managers (Pty) Ltd. For further information, please contact Mike Brown: Tel 011 784 0641 or firstname.lastname@example.org.
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