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If you thought you couldn't profit from B-BBEE - Think again...

by , 11 July 2016
If you thought you couldn't profit from B-BBEE - Think again...
Thankfully, things have changed since the dark days of apartheid. The investment markets are certainly not racist, sexist or homophobic. If you have enough money, you can invest in anything you want. But the successes you achieve in the investment markets are based on the strategies you use, the opportunities you see and the risks that you avoid.

With that in mind, I want to introduce you to a unique investment opportunity in the B-BBEE space that anyone can take advantage of.

It's the first and only investment product in South Africa that enables investors to recognise and reward transformation. It's also a socially responsible and intelligent investment option that offers you diversification across the entire market.

It's an investment in an Exchange Traded Fund (ETF) that weights its portfolio according to the B-BBEE ratings of the top 40 JSE listed companies. These ratings are calculated according to the Department of Trade and Industry's (DTI's) Codes of Good Practice on B-BBEE.
 

Simply put, the more transformed the company, the higher the weighting it gets in the ETF

 
This is great news for you because companies embracing the principles of B-BBEE tend to perform better than companies that don’t.
Especially when you consider how many large scale infrastructural development projects the South African Government is pushing forward with today.
 
Take a look at the top 10 companies currently in this ETF in the graph on the right.
 
Companies with solid B-BBEE ratings stand a better chance of securing public contracts. These are contracts with huge expenditures. As long as government and state-owned enterprises work towards expanding the economy, these businesses will stand to benefit.
 

Cash in on transformation with the NewSA Index (NEWFSA)

 
The NewSA Index ETF (JSE: NEWFSA) offered by ABSA can be bought and sold just like any listed share on the JSE. Since ETFs are passively managed, they have a lower fee structure that actively managed funds. 
 
Another feather in the cap for investors is that the NewSA ETF tracks the price performance of the NewSA Index, dividends ate paid-out to investors in a form of cash every second quarter. The amount is determined and announced before it is paid.
 

Growing annual returns from the NewSA ETF

 
As you can see from the graph above, the average return since inception is 10.46%. The five year return is most impressive at 12.44%. Investment returns have climbed steadily over the last five years which is a good indicator of future growth for this ETF.
 
So, if you want to invest in an ETF that acknowledges companies for taking proactive steps to bring balance to the injustices of the past, take a look at the NewSA ETF.
 
Let’s build your wealth together,
 
Aiden Sookdin
 

Editorial Contributor
Real Wealth 



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