In line with the official listing of the country’s first Exchange Traded Fund (ETF) on Monday, the local bourse is now hoping that a lot of companies will immediately follow and also establish ETF soon.
ETFs are like mutual funds except that it will be listed and traded in the stock market like any stock but instead of beating the index, it will track the performance of the Philippine Stock Exchange index (PSEi).
ETFs are open-ended investment instruments and have become the world’s fastest-growing asset class. ETFs are ideal for investors who want to create a diversified portfolio of stocks with lower investment cost.
The funds, which were incorporated and listed by the First Metro Investments Corp. (FMIC), have ended its first trading session in PSE with an indicative net asset value (iNAV) per share of P99.41 and closing price of P100 apiece, up 0.81 percent.
“ETFs have remained to be one of the fastest-growing asset class in the world because the product itself has shown to be beneficial to investors worldwide and one of the easiest to understand and trade.
“We are hopeful that more retail investors can now participate easily in the growth of our market. Global investors will also be able to benefit as they can readily get exposure to the Philippines with just one product,” said Hans Sicat, PSE president and chief executive officer.
In an interview with reporters after the listing ceremony, FMIC President Roberto Juanchito Dispo said the timing for the ETF listing has been “kind and perfect” as this could sap up liquidity in the system.
For his part, Daniel Videtto, Asia Pacific managing director for Interactive Data Corp., said the FMIC’s ETF listing had a good start, making the Philippines as a frontier strategic market for global investors. Interactive Data is a provider of ETF valuations.
“It’s been fantastic. Hopefully, there would be more ETFs that will be in the market. This will put us [Philippines] in the radar screen for institutional investors,” Videtto said.
The fund has an authorized capital stock of P3 billion that might be fully used up as soon as early next year, Dispo said.
As of now, the company has already been gearing up for the application of an increase in authorized capital stock, which will boost the Fund’s capital from P3 billion to P10 billion.
First Metro Philippine Equity Exchange Traded Fund Inc. (FMETF), which is the exact name of the fund, is a wholly owned subsidiary of FMIC. The Fund is engaged primarily in the business of investing, reinvesting and trading in, and issuing and redeeming its shares of stock in creation units in exchange for a basket of securities representing an index.
First Metro is also contemplating on establishing a bond index ETF soon, which would be a separate company.
“Philippines has a very active fixed-income market. Hopefully, that should be the next strategic project for us. That will be next year,” Dispo further said.