Commodity exposure to reduce in Top40 ETFs

Simon Brown ETF Blog, Latest, Uncategorized

BHP Group

BHP Group

At the end of January, BHP Billiton changed its corporate structure becoming BHP Group* (JSE code BHG) and merging their two holding structures listed in the UK and locally.

The key point is that the BH Group now trading on the JSE is a UK company and as such is considered an inward listed stock (as per SARB classification) and this has implications for its weighting in JSE indices. Now only shares held on the JSE will be used to determine the market cap of BHP Group, ignoring these held on other exchanges. So weightings within indices for BHP Group will be markedly reduced.

Within the Resi10 from Satrix (STXRES*) the weighting will drop from around 30.19% to some 6.98%.

In the Top40 ETFs (STX40*, FNBT40, ETFT40 & SYGT40) the current weighting is 13.15% and will drop to 1.99%.

The changes were effective at the close on 18 March 2022.

As a holder of any ETFs holding BHP Group, this is an automatic process and other shares will have their weightings increased to take up the slack from the reduction in BHP Group. But it does mean in the Top40 commodity stocks will have less influence dropping from the current 36%, this as we’re seeing the Resi10 index and commodities generally at record highs.

In the Resi10 the up-weighted stocks will, of course, be commodity stocks and it’ll mostly be gold and PGM stocks will see their weighting increase.

In the Swix indices, BHP Group was not even a top 10 holding at less than 3%, so modest impact here.

Simon


* I hold ungeared positions.


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