ETF: Understanding the S&P Givi Financial 15 ETF

The Absa Capital S&P GIVI Financial 15 ETF is a strange beast. While the name creates the impression that the ETF is invested exclusively in South Africa’s world-class banking and financial services sector, the ETF also includes a fair but of real estate investment trust (REIT) investments. Banks and life insurance companies are also represented in this ETF.

This ETF is weighted by a combination of low volatility and the intrinsic value of its constituents. The brick and mortar nature of property investments might speak to the ETF’s low volatility. With brick and mortar assets and the potential for steady rental income, an index that aims to lock out volatility could do worse than property.

Companies are only included if they have a market capitalisation (number of shares times by the share price) of R10bn. In addition, the companies in the index must trade an average of R15m per day. The index excludes preference shares, typically issued by banks.

Despite the ETF’s 26.6% real estate exposure, Investec, Nedbank, Old Mutual and Remgro together account for nearly 42% of what remains, which excludes a 6% Investec PLC holding. That leaves less than 30% for other financial players. If you’re hoping for exposure to the banking sector, best keep looking.

ETF name	Absa Capital S&P GIVI Financial 15 ETF
JSE code	GIVFIN
ETF issuer	Absa Capital
Issue date	15 June 2009
TER*	0.18%
ETF benchmark	S&P GIVI SA Financials Index
Tax-free savings account	Investment allowed
ETF major holdings	Download the full list here: GIVI SA Fini 15 ETF
Market cap*	R39.5m
Performance	1 year -12.7% 3 year -20.4% 5 year -36.6% 10 year +42.3%
Dividend yield	3.5%