As Poslovni Dnevnik writes on the 17th of November, 2020, the listing of the first two ETFs or exchange traded funds has finally started on the Zagreb Stock Exchange. This news was announced half a year ago by the head of Hanfa, Ante Zigman, confirming that Hanfa had received a request for approval of the listing prospectus. This means that the best Slovenian shares can now be invested in in the Croatian national currency.
The first Croatian listing of “exchange traded funds”, whose shares are traded on the stock exchange as well as all other shares, was taken care of by the InterCapital group, ie its asset management company (ICAM).
One ETF will be linked to CROBEX 10tr, ie the index of the 10 most liquid shares on the ZSE, and the other to its Slovenian counterpart, SBITOP, which includes the 11 most traded Slovenian shares, often referred to as the best Slovenian shares.
An effective instrument
As the ETF usually monitors the performance of the selected stock index, this marks a type of passive investment, which makes this product especially suitable for small investors who want to invest in the shares of the best companies, but don’t have enough knowledge and other resources to invest in individual stocks.
A similar argument usually accompanies “classic” index funds, but primarily due to technological features, investing through ETFs is, among other things, far simpler, so ETFs have been the fastest growing segment of the asset management industry globally for a long time.
In the thirty years since the first ETFs appeared in the world, their number to date has exceeded 2,300.
Industry associations, on the other hand, estimate that in the next five years, their assets will exceed those of actively managed traditional funds, according to ICAM. With about 15 years of experience in this business and about three billion kuna of assets under management, they are known as the leading independent “asset manager” here in Croatia, and with this recent very significant step forward, they say, they’re opening a new page in terms of doing business.
Although the stock industry in Croatia has seen far better days, especially in the segment of equity funds and when it comes to small investors whose confidence has been shaken considerably in the economy-rattling case of Agrokor, InterCapital believes that things could change with the benefits provided by ETFs as a cost an effective financial instrument.
They hope that Croatian investors, in addition to simply entering and exiting the ETF or the fact that the dividends it collects are non-taxable, will recognise the opportunity to buy the best Slovenian shares in kuna through the ETF, see the opportunity to buy the best Slovenian shares in Croatian kuna, without the need to hire a custodian, exchange kuna for euros and pay withholding tax in neighbouring Slovenia.
They also take into account the fact that the launch of ETFs on the stock exchange comes at a time of historically low interest rates. Stock yields from the CROBEX10 or SBITOP index over the past 10 years support such expectations.
For example, those from CROBEX10 in that period paid an average annual dividend of 4 percent of the investment, while the dividend yield for Slovenian shares in the same period was 5 percent. This year, which has been marked by an ongoing global pandemic, the dividend yield of the CROBEX10tr index is 1.5 percent, and the SBITOP index 4.2 percent.
“Guided by our mission to develop the domestic capital market through innovation and the application of international asset management industry best practices, we’ve developed a product that we firmly believe will be extremely attractive to all potential investors,” said Hrvoje Cirjak, ICAM Board Member.
He added that their intention is to list the same two funds over on the Ljubljana Stock Exchange next year, which will enable the ease of investing in Croatian shares for Slovenian investors. With the listing of the first ETFs on the ZSE comes new terms such as indicative NAV (iNAV).
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