Investment  philosophy

Zshares RandPlay is a new, innovative and dynamic ETF developed specifically for the SA stock market investor. Much of the volatility that occurs in South African stocks relate to movements in the exchange rate. SA is in a unique position as a small open economy where changes in the exchange rate can have a significantly positive or negative effect on various sectors of the SA stock market.

Zshares offer investors the ability to invest in themes (for example, rand weakness or strength) in a way that is consistent and easy to understand. The indices that an ETF tracks can be a generic or a bespoke index. Zshares RandPlay is an “out of the ordinary” ETF because it focuses on a popular investment theme instead of a regular market weighted index. So instead of owning the market as a whole, investors are able to focus their portfolio on a particular theme by adding exposure to one or more Zshares. This exposure can be adjusted readily as views change due to their tradability.

Zshares RandPlay is an ETF designed to track the Investec RandPlay Index. This index was developed by Investec and is designed to create an optimised South African equity portfolio to outperform the FTSE/JSE Africa Top 40 Index (ALSI40) when the rand strengthens, as measured by the rand/US dollar exchange rate. 

The Investec RandPlay index is a bespoke index developed by Investec and calculated by the JSE. The index constituents are selected according to a quantitative methodology which aims to optimise a strategic equity position on the JSE. The chosen constituents are then combined in a portfolio that maximises the risk adjusted return. This is done within specific constraints. Given that the underlying weightings in the basket may vary during the quarter depending on market movements, the index constituents are reviewed and rebalanced every quarter. Zshares RandPlay therefore offers a statistically robust solution for enhanced index tracking in SA.

Zshares RandPlay can be seen as a Smart component of your equity portfolio, allowing you to focus on companies that will benefit directly from sustained rand strength. In general, Rand strength is associated with low inflation and an encouraging interest rate environment. Consequently, these companies tend to be assisted by both low interest rates as well as the associated improvement in domestic economic growth. This benefit is reflected in a wide range of sectors including retailers, banks and selected industrial companies. This relationship between sustained rand strength and domestic orientated companies has been thoroughly tested and is relatively consistent over time.

Importantly, the more sustained the strength, the more effective Zshares RandPlay will be in delivering superior performance. The Investec RandPlay model is rigorously tested using multi factor regression technology to ensure the portfolio outperfoms as long as sustained rand strength is attained. In summary, Zshares RandPlay is able to offer a cost effective and tradable portfolio of stocks that benefit from rand stability in a single security.

Key features

• Focussed South African equity exposure
• Companies that benefit from rand strength
• Smart alternative to the ALSI40 taking into account your rand view
• Cost-effective alternative to unit trusts
• Fully transparent and tradable
• Easy to invest via your stock broker
• Approved by the ACI, JSE and SARB
• Regulated by the FSB