The Market Monitor Minding the Nation's Business
First Metro Philippine Exchange Trade Fund Inc. (FMETF) will release an additional P1 billion in Exchange-Traded-Fund (ETF), company executives said.
The issuance of the ETF which tracks the stock market will increase the liquidity in the market as these will be offered to both retail and institutional investors, FMETF Chairman Francisco Sebastian said.
It will be a one-off offer to double the FEMTF ETF issuance to P2 billion upon the issuance of the additional P1 billion in ETF, Sebastian said.
Sebastian said that FMETF plans to eventually offer P3 billion in ETFs.
At the moment, only the FMETF trades ETF in the local bourse for the past three years.
“We will encourage new products and services. Right now, it is like baby steps for the ETF market but others will follow,” Sebastian said.
In other countries, ETF has an average share of 30 percent in trading volumes at the stock market. “We have to drum up the ETF,” Sebastian said.
He said 10 million in ETF shares will be traded at the stock market based on a price of P113 per ETF share at current level.
“This is still being worked with agreements to be signed. We are also talking with foreign firms. We will be promoting the PSE, the local index. We welcome the diversification of products,” Sebastian said.
Sebastian said FMETF, however, is monitoring the market as the PSE has been trading below the 7,000 index lately but he sees the market doing good in the long run.
“Our funds are one of the best performing in the market which is statistically proven,” he said.
There are 30 stocks constituting the index for the ETF. Sebastian said that foreign firms have been in talks with the FMETF for the issuance of new ETFs in the PSE.
FMETF President Augusto Cosio Jr. said institutional investors expressed their interests on the ETF but they still wanted to track the 3-year period history of FMETF. They also expect companies issuing the ETF in the local bourse to have at least a 3-year track record.
The awareness of investors in trading ETF has become evident also in how the online investors, particularly retail, have used ETF as a tool in peso cost averaging, Cosio explained.
Mr. Cosio said that in the creation of the new ETF issuances, foreign technology experts will be assisting the FMETF because the technology of ETF is “very much foreign.”
PSE President Hans Sicat said companies entering the ETF market will have to work on their own strategies. RIZA LOZADA