NSE Prepares to List Third Exchange Traded Fund

This Day Live, July 23 2014 --

The Nigerian Stock Exchange (NSE) is to list the third exchange traded fund (ETF) as Lotus Capital Limited prepares to float the Lotus Halal Equity Exchange Traded Fund.

 

Two ETFs, the NewGold and Vetiva Griffin 30, are already listed on the NSE. However, a third ETF to be floated by Lotus Capital is underway. A total of 100 million units of the ETF will be made available to investors for subscription prior to its listing on the NSE.

Following the approval of the offer document by the Securities and Exchange Commission (SEC), parties to the offer have signed  the offer deal.

The Board of Directors of the company and relevant professional parties, including Vetiva Capital Management Limited (Issuing House to the Offer), were present to execute the offer documents during the signing ceremony.

Lotus Capital, upon receipt of the final approval from the SEC, plans to launch the Lotus Halal Equity Exchange Traded Fund, an based on the NSE Lotus Islamic Index.

The Index is an adjusted market capitalisation weighted index currently comprising of 15 Shari’ah compliant equities listed on the floors of the NSE
Lotus Capital is an investment management company specialising in asset management according to the Islamic system of financial management.

The NSE Lotus Islamic index, launched in 2012 covering 15 equities with combined market, excludes banks, companies with high levels of debt or leverage and other stocks that conflict with Islamic principles.

According to the NSE, the index was designed to attract Sharia/ethical investors in Nigeria’s fledgling stock market, particularly those from the Middle East.

The new index is weighted towards fast moving consumer good, cement, oil marketing and manufacturing sectors including heavyweight Dangote Cement.

At the introduction, Lotus Capital explained that no sector would be allowed to account for more than 40 per cent of the index, noting that the index will be reviewed every six months.

It was also said she has a buffer of 30 firms to consider for the inclusion at any one point but that stock liquidity was key. On debt, she said total debt as a percentage of the firms total value should not be more than 33 per cent for the company to qualify.

According to analysts, Islamic banking assets globally now exceed $1 trillion and could reach $4 trillion by 2020, estimating $50 billion in managed funds invested according to Islamic principles in equities. 

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