A common criticism of passive investing is that it is a slave to the index and has no way of managing the risks typically associated with equity investments, i.e. risk of losses, market risk, etc. While over time, equities will outperform other asset classes, in the short term they may be subject to high volatility and even severe losses, and South African equity index strategies are generally notorious for the high concentration in a few large shares.
Absa has taken up this challenge and is launching ETFs that track indices with built-in risk management measures. These products attempt to minimise some of the risks involved in equity investing and, in this way, reduce investors' losses when markets turn negative or become unpredictable.
The roadshows took place between Johannesburg, Durban and Cape Town, having partnered with ETFSA and Just One Lap. These roadshows aimed to review the new ETF’s and the methodology behind them as to help investors in learning how to use them effectively in their investment portfolios.
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