Expat | The Bulgarian ETF tracking the performance of the SOFIX Index gains momentum

The Bulgarian ETF tracking the performance of the SOFIX Index gains momentum

07.11.2016

The exchange-traded index fund which tracks the performance of the main Bulgarian stock exchange index SOFIX has gained momentum and will be cross-listed on a large foreign market, according to its manager Expat Asset Management. Expat Bulgaria SOFIX UCITS ETF was listed on the Bulgarian Stock Exchange – Sofia at the end of Sept 2016 and has been permanently among the most liquid positions on the BSE since.

The index ETF has grown rapidly, gaining a strong vote of confidence from both retail investors and some of the largest institutional players in Bulgaria. As of the beginning of October, less than a month and a half after its launch on the BSE - Sofia, the fund reached net asset value of over EUR 13 mln. Among the biggest investors in the ETF are four of the largest Bulgarian pension funds.

Expat Asset Management – the management company of the index ETF – is expecting more orders from institutional investors till the end of the calendar year. The asset growth would allow the management company to attract interest from international investors by launching an application for cross-listing of the fund's shares on a large foreign market. The cross-listing of the index fund would ensure quick and easy access for global investors to the Bulgarian stock market.

About Expat Bulgaria SOFIX UCITS ETF

Expat Bulgaria SOFIX UCITS ETF is the first exchange-traded fund in Bulgaria. It tracks the performance of the major BSE stock index SOFIX using the direct physical replication method, and was listed on the Bulgarian Stock Exchange – Sofia on Sept 27, 2016 (ticker BGX). The ETF is compliant with the UCITS directive of the European Union. Expat Bulgaria SOFIX UCITS ETF is created and managed by Expat Asset Management. The primary market for redemption and issuance of shares is open to eligible investors only. All investors can trade the fund's shares on the secondary market.

About the SOFIX Index
The SOFIX Index is the main index on the Bulgarian Stock Exchange – Sofia. It is composed of the 15 largest and most liquid shares traded on the BSE. The market cap of the SOFIX companies at end of October 2016 was about EUR 1.4bn. The index ETF invests in all of them in proportions closely matching those of the index within the UCITS restrictions.
Since its peak in 2007, the SOFIX index has fallen by -73%. In comparison, the US stock market has risen by +62%, and the German market by +77% for the same period. The Bulgarian market appears to be undervalued and with good growth potential. The economic fundamentals of the country are strong and improving. The economic growth is robust at 3.1%, fiscal debt is the third lowest in the European Union at c. 26%, and the state budget is running at a 3% surplus year-to-date. The SOFIX index ETF provides an easy and convenient way for investing in the country and the region as a whole.

Benefits of investing in Expat Bulgaria SOFIX UCITS ETF

An easy and transparent way for investing in the Bulgarian stock market. Investors buy all the companies from the SOFIX Index. The portfolio of the index ETF is published and updated daily on the website of Expat Asset Management.
Diversification. Investors gain exposure to the 15 largest and most liquid stocks on BSE – Sofia. Diversification lowers the volatility of the investment.
Superior liquidity. The Bulgarian index ETF is consistently among the most liquid positions on the BSE – Sofia. The primary market for purchase and redemption of shares is also open every day to larger qualified investors.
Easy to follow. There is no need to devote time and resources to analyze, pick and follow individual stocks. Index investing is a convenient and efficient macro play.
No income tax for investors. Capital gains (profits) from instruments traded on the Bulgarian Stock Exchange – Sofia are exempt from taxation in Bulgaria.
No corporate taxation for the ETF. UCITS-compliant vehicles, such as the index ETF, are exempt from corporate taxation in Bulgaria.
Low transaction fees. It is cheaper to invest in one instrument rather than in shares of multiple companies. There are no taxes in Bulgaria when buying and selling shares, only brokerage and settlement commissions.
European regulation. The ETF is fully compliant with the UCITS directive of the European Union.