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South Africa is sweet sixteen for HSBC ETFs

HSBC Exchange Traded Funds has introduced the HSBC MSCI South Africa ETF, its 16th ETF in Europe.

The ETF is designed to mirror the performance of the MSCI South Africa Index, offering exposure to companies listed on the index. These include telecoms firm MTN Group, energy and mining company Sasol and financial firms Standard Bankl and Investec. The index is market-capitalisation weighted, representing the biggest companies in South Africa, with the basic materials sector featuring heavily.

The ETF uses physical replication in tracking the index, investing directly in the securities in generally the same proportions as in the index. Where physical investment is difficult to achieve the ETF can replicate index performance using derivatives. It may also use derivates to reduce tracking error, enabling the ETF to more closely reflect the index performance.

HSBC says South Africa is one of the bigger emerging market economies and is attractive from an investment viewpoint because it is rich in natural resources, with well developed financial, communications, energy, and transport sectors. It is difficult for UK investors to access the region unless part of a broader Africa or global emerging markets fund, or an offshore fund that is not regulated by the FSA.

Some investors will be looking for cheap and liquid exposure to South Africa through an ETF. With a total expense ratio of 0.6 per cent, HSBC’s ETF is 0.14 per cent cheaper than the iShares MSCI South Africa ETF, which also uses physical replication with the flexibility to use derivatives if necessary.


Axa fund buys into Russia and Mexico

Julian Thompson has increased the Axa Framlington emerging markets fund’s exposure to Russia and Mexico since he was appointed portfolio manager in December. Thompson joined Axa from Threadneedle, taking over the management of the fund from Mark Beveridge.
He plans to double the size of the emerging markets team by the end of this year.

 He […]

Woodford: It is dangerous to play the China story

Invesco Perpetual income manager Neil Woodford believes investors in Chinese commodity and mining markets are due “a dose of realism”. In an interview with Money Marketing at the Fund Strategy Investment Summit in Kitzbühel, Woodford said he has concerns over overheating and a bubble forming in the Chinese economy. He said: “We are already seeing […]


Tenet calls on TSC to widen RDR debate

Tenet is calling on the Treasury select committee to broaden its RDR consultation, saying it is too narrowly focused on adviser qualifications and the abolition of commission. Tenet says this Wednesday’s TSC meeting on the RDR must widen the debate to include the impact that regulation is having both in terms of cost and contraction […]

Return to sector

Time and time again, I find myself return ing to the thorny topic of IMA sectors – and not because we find them so but because the trade and national press (including this esteemed publication) are so exercised about them. They, in turn, are partly fuelled by the strident views of IFAs, of course. This […]


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