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NZX's Smartshares emerging markets ETF swells by almost 50% with new subscription

Thursday 8th February 2018

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NZX's Smartshares emerging markets fund has grown by almost half with an institutional investor subscribing for $28.7 million new units in the passive investment vehicle. 

Reuters data show almost 21.9 million units were traded at a price of $1.312 apiece today, which an NZX spokeswoman confirmed was a subscription for new units understood to be an existing institutional investor.

That's the biggest subscription for the fund, which is invested in the Vanguard Emerging Markets exchange traded fund, since it launched in August 2015 with 30.4 million units. Prior to today, the fund had 44.3 million units on issue. The ETF aims to track the FTSE emerging markets ETF, which invests in companies from emerging markets such as China, Brazil, Taiwan and South Africa.

The new subscription follows heightened market volatility around the world which saw a selloff in global equities, and the NZX-listed ETF trading price is at a month-low. The fund allotted 30,000 new units yesterday and had a net tangible asset backing of $1.317 per unit. The units recently traded at a discount, down 0.9 percent today to $1.308. Still, the units are up 25 percent over the past year. 

The Vanguard FTSE emerging markets fund fell 2.8 percent to US$46.51 in New York overnight, the lowest it's been since late December. The Vanguard fund's total net assets were US$100.9 billion as at Jan. 31, of which its five biggest holdings were WeChat developer Tencent Holdings, South African media group Naspers, Taiwan Semiconductor Manufacturing, Alibaba Group, and China Construction Bank. 

The Smartshares emerging markets subscription is the second chunky purchase of new units in one of NZX's ETFs this year. An institutional investor subscribed to 4.2 million new units in the global bond fund ETF on Jan. 11, a day the yield on 10-year US Treasuries rose to a 10-month high on reports China was considering slowing its purchases of US federal government debt. The global bond fund, which has 49.1 million units on issue, recently slipped 0.1 percent to $3.148 and was up 1.9 percent over the past year. 

NZX sees ETFs as one of several strings to reinvigorate growth in the capital market, linking the vehicles to a broader suite of products and new distribution channels to attract a different investor to the public market.

The acquisition of SuperLife in 2014 was a key plank to expanding that product range adding $1.27 billion of funds under management at the time to NZX's existing $400 million managed in its Smartshares division. The stock market operator's Smartshares funds under management have grown to $2.17 billion as at Jan. 31, of which $1.45 billion is in SuperLife funds. 

NZX shares were unchanged at $1.12, up 1.8 percent over the past 12 months. 


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