With the new listings of the First Rand exchange-traded notes (ETNs) it takes the total to 36 First Rand ETNs on the platform. We have put together this blog on what an ETN is, on all the new ETNs as well as all other ETNs available on the EasyEquities platform.
Sixteen new First Rand ETNs debut on the platform making it a total of 36 ETNs by First Rand in total. From Activision Blizzard to Visa Inc, all of the ETNs offered by First Rand track the performace of globally listed shares, yet they are available in your EasyEquities ZAR account. In addition to these we have 12 other ETNs on the platform from Absa Bank, Standard Bank and Investec Bank. Bringing the total number of ETNS on EasyEquities to 48. This gives investors variety in the ETN space to pick from. All the ETNs are listed below with links to the EasyEquities platform.
Alot of you may be asking, but what exactly is an ETN?
Like ETFs, ETNs are traded like shares on the JSE and also track returns of benchmarks or indices similar to those tracked by ETFs. But get this: ETNs do not actually hold any securities in the benchmark they track.
Instead, an issuing bank promises to pay to investors the return reflected by the index’s performance minus their fees. Where an ETF would sometimes reflect a difference in value between its collection of shares and the actual one on the index it tracks (because it’s always buying and selling those shares to match the index which can cause a slight delay), an ETN is guaranteed to match the index exactly. But that guarantee doesn’t come for free. Banks charge for the fact that they are guaranteeing the returns of the ETN. Technically that makes ETNs riskier than ETFs because if the firm which issued the particular ETN were to go bankrupt, investors might not receive their full investment back. But because an ETF actually contains all of those assets, even if the management firm went bankrupt, the fund investments would still be valuable.
This means you can access commodities, certain foreign currencies through ETNs without buying the physical dollars, gold or oil?
Because ETNs aim to provide you with exposure to exchange rates, commodities, bonds or shares which would be difficult and expensive to take part in otherwise. Exchange Traded Notes are not: shares, share-based securities or ETF’s.
Here are some good-to-knows about Exchange Traded Notes (ETN’s)
ETN’s Track, EXACTLY, the performance of their underlying market benchmark
They are traded and settled on the stock exchange, the same way a share or ETF is traded, and can be held in your brokerage account where it can can be easily bought or sold. Because of the future contract structures, an ETN does have an expiry date, but these dates are 10 - 20 years from the date of purchase and at the end of the expiry date, you will get paid out at the ETN fair value at that time.
- Ease of Ownership
ETNs do not involve any of the difficulties with buying and managing or storing physical assets like oil, gold or soft commodities.
- What are the risks?
Well, they are more riskier than ETFs. When an investor buys an ETN, the issuer promises to pay the amount reflected in the index, minus fees, upon maturity. This means that an ETN has an additional risk compared with an ETF. this is called counter party risk.
The beauty of the ETN structure is that it can be linked to anything. There are ETNs that track hard to reach corners of the share market. They sometimes combine shares or bonds, or use other sophisticated strategies that would be difficult to package into a traditional ETF.
So, in short, if you are looking to have access to gold, oil, dollars and soft commodities without physically buying the underlying assets, Exchange Traded Notes could be your solution.
So, enough chitter chatter.
On our (ZAR) platform here are ETNS available to you:
Quanto ETN: The ETN does not take the ZAR/USD exchange rate into account when tracking the share price of a respective company.
Compo ETN:The ETN takes the ZAR/USD exchange rate and share price of the respective company into account
For a better understanding behind the FNB ETNs see their brochure below:
Recently listed new First Rand ETNs on the platform
Other First Rand ETNs added late last year.
All other ETNs on the platform
The Investec Bank Limited IB SWX40 TR2 ETN OCT22 is an exchange traded note registered in South Africa. The Note seeks to track the performance of the FTSE/JSE SHAREHOLDER WEIGHTED TOP40 Total Return Index.
The Investec Bank Limited IB TOP40 TR2 ETN OCT22 is an exchange -traded note registered in South Africa. The Note seeks to track the performance of the FTSE/JSE AFRICA TOP40 Total Return Index.
NewWave Euro ETN is an exchange-traded note incorporated in South Africa. The ETN is issued out of Absa Bank's NewWave ETN programme, enabling investors to obtain exposure to the reference currency.
NewWave Pound Sterling ETN is an exchange-traded note incorporated in South Africa. The ETN is issued out of Absa Bank's NewWave ETN programme, enabling investors to obtain exposure to the reference currency.
NewWave Platinum ETN is an exchange-traded note incorporated in South Africa. The ETN is issued out of Absa Bank's NewWave ETN programme, enabling investors to obtain exposure to the reference currency.
NewWave Silver ETN is an exchange-traded note incorporated in South Africa. The ETN is issued out of Absa Bank's NewWave ETN programme, enabling investors to obtain exposure to the reference currency.
NewWave US Dollar ETN is an exchange-traded note incorporated in South Africa. The ETN is issued out of Absa Bank's NewWave ETN programme, enabling investors to obtain exposure to the reference currency(USD).
The SBACOP ETN provides access to the copper price on world markets, using copper commodity futures traded on COMEX (traded in rands on the JSE).The ETN tracks the performance of the Copper COMEX futures contract.
The Standard Bank Corn ETN provides access to the corn price on world markets, using corn (CBOT) commodity futures contracts (traded in rands on the JSE).
The Standard Bank Wheat ETN provides access to the wheat price on world markets, using wheat CBOT commodity futures contracts (traded in rands on the JSE).
The Standard Bank of South Africa Limited- Issue of oil exchange traded note tracks the performance of the NYMEX OIL WTI futures contract.
There are 2800 stocks on the NYSE and over 2000 on the ASX. We add new stocks to our offering based on the greater need from our community of investors on the platform and after doing careful research beforehand. To keep investing affordable and free of monthly costs for our users we scale our business with the needs of our active investors. If there are very few requests for a particular stock we hold off on adding it until such a time there are a moderate number of requests for the stock.
Remember that you can still continue to vote for the shares you’d like to see on EasyEquities USD and AUS, here.