ETF Index Methodology Change Monitoring Checklist

An ETF can remain listed while its index rules, holdings or operating arrangements change. A monitoring process should therefore test what changed after purchase instead of relying indefinitely on the original Shariah conclusion.

Educational information only: This is not investment, tax or Shariah advice. Verify current provider documents and obtain qualified review.

1. Record the approved baseline

Save the fund name, ticker, issuer, index, mandate, certificate and holdings date used for the original decision.

2. Subscribe to issuer notices

Monitor regulatory announcements, shareholder communications, factsheets and material-change notices.

3. Track index methodology versions

Record the methodology date, screening rules, rebalance schedule and any consultation or amendment.

4. Compare index constituents

Review additions, deletions and weight changes at each rebalance. Flag companies or sectors requiring renewed screening.

5. Compare fund holdings

Save dated holdings files and reconcile material differences from the tracked index.

6. Monitor replication methods

Identify any change between full physical, sampling or synthetic exposure and the use of derivatives or collateral.

7. Review cash and counterparties

Track cash balances, deposit arrangements and counterparties that may fall outside the equity-screening description.

8. Monitor securities lending

Record changes to lending permissions, collateral, revenue allocation and Shariah treatment.

9. Reconcile distributions

Compare declared distributions, account receipts, withholding and accumulation or reinvestment treatment.

10. Update purification evidence

Keep the provider’s method, calculation period, data source and the investor’s payment record.

11. Review fees and tracking

Monitor changes in total expense, platform cost, brokerage, spread and tracking difference.

12. Watch liquidity and market structure

Record trading volume, spread, market-maker changes, suspension notices and unusual premiums or discounts.

13. Renew Shariah evidence

Confirm the current reviewer, scope, date and exceptions. Establish what event would trigger an immediate reassessment.

14. Define action thresholds

Set rules for investigation, purchase suspension, sale review and escalation when evidence expires or the mandate changes.

15. Maintain the monitoring register

• Index and methodology changes

• Holdings and replication

• Cash, lending and derivatives

• Fees, liquidity and distributions

• Shariah and purification evidence

Use the JSE, issuer documents and current fund announcements as primary sources. The record should show when the holding was last revalidated and why it remains approved.