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JSE-listed ETFs are currently in their quarterly distribution cycle, and investors are advised to take note of the following which may affect the price at which these ETFs trade, as well as the value of their ETF holdings, which will include distributions due to be paid in April.

Exchange Traded Funds (ETFs), just like listed ordinary shares, have to announce their intention to pay a distribution, through the Stock Exchange News Service (SENS). The distribution announcement will typically contain the following information:

  • Last day to trade "CUM" distribution ("LDT") - this is the date of the last day on which investors can trade in the ETF at a price that includes the distributable amount. If you buy on or before this day, you will qualify to receive the distribution when it is paid. If you sell on or before this day, you not be eligible to receive any distribution.
  • Securities trade "EX" distribution - this is date of the first day on which the price of the ETF no longer includes the distribution amount, so all else being equal, the price of the ETF will fall by the distribution amount. Investors who buy the ETF on or after this day, will not receive the distribution still due to be paid, and therefore should pay a lower price from that day, as they will not be receiving the distribution.
  • Record date - this is the date of the last day on which all investors registered in the STRATE electronic share register, will qualify for the distribution. This is usually 3 business days after the LDT date, which reflects the JSE's settlement cycle of t+3.
  • A statement relating to when an announcement will be made regarding the actual distribution amount, and the date on which it will be paid to qualifying investors.

In most cases, ETFs will reach their LDT date, and beyond the EX date, without investors knowing what distribution amount to expect. This also means that investors do now know by what amount they can expect the price of the ETF to fall on the EX date (all else being equal, this should be the expected distribution amount), nor what the value of that distribution payment will be. This results in a period of uncertainty around the fair value at which the ETF should be trading, as well as an underestimation of the overall value of your ETF investment, as the distribution value is both unknown, and not yet available as cash in the investor's account.

In the interest of improved information disclosure and to assist investors in making better investment decisions during this period of uncertainty, the ASISA ETF Standing Committee has compiled a distribution schedule for all the JSE-listed ETFs to list the salient dates as well as the estimated distributable amount for each ETF, where applicable. This schedule will be updated every time new information is disclosed by the ETF issuers, until such time as all ETFs have declared and paid their distributions for the current distribution cycle, being Q1 or 2017. This is expected to be sometime during the course of April.

 
2017
ETF distribution schedule for Q3-2017 (22 September 2017)   [602kb]