The recent restructure of the Ashburton Global 1200 Equity ETF, which has resulted in a substantially lowered Total Expense Ratio (TER), has made its investment case even more compelling. The TER will reduce from 0.65% to 0.48%, making for better performance in the long term as investors get to keep more of their returns.
The portfolio started trading on the Johannesburg Stock Exchange (JSE) under its new share code – ASHEQF - on 9 September 2020. The new name is the Ashburton Global 1200 Equity Fund of Funds ETF (“portfolio”). The management of the portfolio, income distributions, risk profile and ASISA classification will all remain the same.
Investors will also retain the same exposure to the S&P 1200 Index but in a more efficient manner.
The restructure means that instead of buying individual shares, the portfolio now buys seven underlying ETFs in the exact same weights as represented in the sub-indices that are the composite indices of the S&P 1200 Index. As the seven ETFs are underlying securities, the structure of the Ashburton Global 1200 ETF has changed from a standard portfolio to a fund of funds structure.
The portfolio comprises the following ETF indices with the following weightings:
S&P 500 (US) ETF - 64.3%
iShares Core MSCI Europe UCITS - 18.8%
S&P TOPIX 150 (Japan) ETF - 7%
S&P/TSX 60 (Canada) ETF - 3.1%
S&P/ASX All Australian 50 ETF - 2.1%
S&P Asia 50 ETF - 4.8%
S&P Latin America 40 ETF - 0.7%
The portfolio captures 70% of the world market capitalisation, covering 30 countries and providing investors with currency and geographic diversification in just one ETF.
With a large allocation to the S&P 500, which ended up over 30% on a total return basis in 2019, investors in the Ashburton Global 1200 Equity FoF ETF have been able to participate in the United States (US) bull market and benefited greatly from the powerful performance of the top technology stocks such as Apple, Amazon and Microsoft.
Uniquely to global ETFs listed in South Africa, the Ashburton Global 1200 Equity FoF ETF also has an allocation to emerging markets (5.8%) which provides further diversification. The MSCI Developed World Index in comparison, does not include emerging market exposure.
Local investors, including trusts, individuals and corporates, will not have to use their offshore allowance to gain further access to global markets.