First Metro Philippine Equity Exchange Traded Fund Inc. (First Metro ETF), the country’s first Exchange Traded Fund (ETF), expects its P3-billion market capitalization to be fully utilized as early as next year.
ETFs are like mutual funds except that these instruments are listed and traded at the stock market like any stock. But instead of beating the index, ETFs track the performance of the Philippine Stock Exchange index (PSEi).
Roberto Juanchito Dispo, First Metro Investment Corp. (FMIC) president, said that the P3-billion market capitalization of its ETF may be fully consumed as early as next year.
Moreover, Dispo said that it is possible that the group may hike the capital of its ETF by up to P10 billion within the next three years.
First Metro ETF will start trading at the local bourse on December 2, selling initially P750 million at P100 par value.
According to Dispo, the company is also looking to introduce different kinds of ETFs once it sees a positive reception from the market towards its first ETF.
“We’re looking at fixed-income ETF. Also, we’re not discounting the possibility of commodity ETF and asset allocation ETFs,” Dispo said.
A commodity ETF represents an investment in physical commodities like agricultural, natural resources and metals, while fixed income ETFs exclusively invest in bonds.
“They are all in the conceptualization stage. We need to launch this ETF index first and from there, depending on the response of the investors, we may diversify into other products,” Dispo specified.
First Metro ETF, sponsored and organized by FMIC, signed key agreements with the PSE last week, paving the way for the listing of the country’s first-ever ETF. First Metro ETF President Eduardo Carreon and PSE Chief Executive Officer and President Hans Sicat have signed the index provider agreement and listing agreement for the ETF issuance. Essentially, the index provider agreement states that the PSE is allowing First Metro ETF to track the PSEi, while the listing agreement outlines First Metro ETF’s responsibilities as a listed company on the bourse.
First Metro Asset Management Inc. (FAMI) and First Metro Securities Brokerage Corp. will be the ETF’s fund manager and principal distributor, and lead authorized participant and market maker, respectively.
As fund manager and principal distributor, FAMI will market and list the First Metro ETF at the PSE.