Tokenised ETFs offer attractive investment options

Technology has evolved to the point where ETFs are more accessible than ever before to a wider range of investors, from high-net-worth individuals to people with some spare capital looking to enter the world of investing.

Efficient Group chief economist Dawie Roodt says that the emergence of platforms such as Mesh.trade, which is a blockchain-based, multi-sided capital markets ecosystem for the issuance, trade, and management of digital financial assets over their full lifecycle, has democratised access to investment opportunities broadly, and ETFs specifically.

“Mesh is a decentralised platform that removes all the obstacles typically found in capital markets and replaces it with what they call an elegant flow. The Efficient Group has issued a number of tokens linked to ETFs on Mesh’s platform because it enables more investors to trade the instruments easily and transparently,” he says.

ETFs offer exposure to a broad range of assets, sectors, and geographic regions, helping to spread risk, potentially reducing exposure to market fluctuations – something that has been of concern to the South African investment community. Key to their appeal is that ETFs can be bought and sold like individual stocks, and are designed to track things as diverse as bonds, markets, commodities and much more.

Roodt says that the emergence of the blockchain and decentralised platforms has enabled ETFs to be tokenised, a word South African investors have become accustomed to of late. Mesh.trade recently successfully launched Africa’s first tokenised bond, which drew widespread media attention as well as investor interest and broad subscription.

“While similar to the tokenised bond that Die MOS issued as a native Smart Asset on the Mesh platform, tokenised ETFs are digital representations of assets that can be traded in fractional amounts. The tokens are traded on the blockchain which increases transparency, lowers costs and, very importantly, increases accessibility,” explains Roodt.

“While similar to the tokenised bond that Die MOS issued as a native Smart Asset on the Mesh platform, tokenised ETFs are digital representations of assets that can be traded in fractional amounts. The tokens are traded on the blockchain which increases transparency, lowers costs and, very importantly, increases accessibility,” explains Roodt.

Mesh.trade MD Connie Bloem says that Mesh has been designed to optimise the current market infrastructure, remove many barriers to entry and reduce complex, exorbitantly priced processes. “We believe that capital markets should create economic opportunities for all who interact with them. Mesh opens capital markets to all by making them easy to access, simple to use and transparent,” she says.

Bloem says that the Efficient Group has issued tokens linked to a diverse range of ETFs on the Mesh platform, including the Satrix S&P 500 ETF, Satrix 40 ETF, Satrix MSCI World ESG Enhanced Feeder ETF, Satrix MSCI India ETF, Sygnia 4th Industrial Revolution ETF, and CoreShares S&P SA Divi Aristocrats ETF, amongst a number of others, to suit a diverse base of investors.