ETF: The Ashburton 1200 facelift

In ETF Blog, Latest by Kristia van Heerden

The Ashburton 1200 (ASHEQ) ETF is the only ETF weighted by market capitalisation that invests in developed as well as emerging markets. For that reason, it’s been our ETF of choice for a few years.

This ETF has always been slightly more expensive than other locally-listed global offerings. The Ashburton team is changing the makeup of this ETF to be more competitively priced. Should the changes be approved, the total expense ratio (TER) of this ETF will reduce from 0.37% to 0.25% and the total investment cost (TIC) from 0.67% to 0.49%. Investors can help ensure these changes take effect by participating in the voting process via stockbrokers before 4 August 2020.

What’s new

First of all, Ashburton will no longer hold the underlying companies directly, but rather a collection of ETFs. This will make it a feeder fund of funds. We explain feeder funds here and talk about funds of funds here. Thankfully, the exposure of this ETF remains untouched. By buying seven ETFs instead of hundreds of shares and ETFs, the management cost is reduced significantly. 

What’s under the hood

To ensure continued exposure to 1200 companies throughout developed and emerging markets, this ETF will now buy seven ETFs. These ETFs will provide exposure to the economies of the USA, Europe, Japan, Canada, Australia, Asia and Latin America. 

The Ashburton 1200 is therefore one share that buys the seven ETFs listed below:

  1. iShares Core S&P 500 ETF
  2. iShares MSCI Europe UCITS ETF
  3. iShares S&P/TSX 60 Index ETF
  4. iShares Core TOPIX ETF
  5. iShares Asia 50 ETF
  6. iShares Latin America 40 ETF
  7. SPDR S&P/ASX 50 Fund

What this means for you

If you already hold the ETF, you get to vote on whether Ashburton can go ahead with these changes. You will be contacted by your stockbroker with instructions around the voting process. 

Secondly, the international securities identification number (ISIN) number and the alpha code of the ETF will change. Although the exposure and underlying index of the ETF stays the same, the way in which we get exposure to the constituents of that index has changed and it therefore exists as a new product. Practically, this means the minimum disclosure documents won’t include historical ASHEQ performance and price data. 

None of your existing ASHEQ shares will have to be sold or dematerialised, which means no tax events will be triggered by this change. 

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