The South African exchange-traded product (ETP) industry has experienced a strong third quarter this year, with assets amounting to R99.3billion. Photo: African News Agency (ANA)

The South African exchange-traded product (ETP) industry has experienced a strong third quarter this year, with assets amounting to R99.3 billion, an increase of 27.6 percent since the beginning of the year.

Reporting on the state of the industry, which consists of issuers of exchange traded funds (ETFs) and debt instruments known as exchange traded notes (ETNs), Mike Brown, the managing director of online ETF platform etfSA.co.za, said a gain of R8 billion was made in the third quarter.

This stemmed mainly from a rise in commodity exchange traded funds in issue and from price gains in these products. 

Four new ETFs were issued in the period, all smart-beta products, which are passive funds that use factor indices to capture performance above that of the market average.

Absa Capital, with its range of NewFunds products, issued three ETFs that manage volatility by switching between cash and equities, depending on momentum and drawdown targets.

The extent of the portfolio adjustments rely on various trigger levels being breached. This formula-driven approach is a first for South African ETFs, Brown said.

CoreShares replaced its Equally Weighted ETF with a smart-beta product, the Scientific Beta Multi-Factor ETF, which makes use of a six risk factor criteria to construct its portfolio. As the mandate differs materially from the Equally Weighted Top 40 ETF, it can be regarded as a new product, Brown added.

There are now 106 exchange-traded products on the JSE (78 exchange traded funds and 28 exchange traded notes) issued by 12 companies. 

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