PH firm to launch fund that will track S&P 500
MANILA, Philippines–Investment bank First Metro Investment Corp. is set to tie up with New York-based investment management firm BlackRock Inc. to offer a new exchange traded fund (ETF) tracking the S&P 500 index, targeting investors who wish to participate in the US stock market.
“This will empower Filipino investors to invest in S&P without the complication of foreign exchange (volatility),” FMIC president Roberto Juanchito Dispo told reporters on Wednesday.
The plan is to list on the local stock market by the third quarter of the year a peso-denominated ETF tracking the S&P 500.
BlackRock has a fund that invests in a portfolio of assets whose performance seeks to match that of the S&P 500 index, a basket of 500 US-listed stocks that are considered to be widely held.
Created in 1957, S&P 500 is deemed to be a representative of the US stock market as a whole, providing a broad snapshot of Wall Street sentiment.
The S&P 500-tracking fund targets local investors who would like to take a position in the US market and ride on the rebound of the US economy.
But ahead of the launch of a peso-denominated S&P 500-tracking ETF, Dispo said FMIC was planning to sponsor a consumer index-tracking fund, targeting the launch within the first half of 2015.
Dispo also said that FMIC had talked to the Philippine Stock Exchange (PSE) on the creation of a consumer index that the group could use as benchmark for a consumer ETF index.
Like mutual funds, an ETF pools funds by selling shares to the investing public. But unlike mutual funds, its price is quoted real time so investors immediately know the buying or selling price of their ETF shares. ETF investors may buy or sell shares through stockbrokers.
FMIC listed the country’s very first ETF—the PSE index-tracking First Metro Philippine Equity Exchange Traded Fund (FMETF)—in end-2012. Rather than buying all 30 stocks in local barometer PSEi, the new instrument First Metro ETF opened market access even to ordinary investors even with a small amount of participation. FMETF has an authorized capital of P3 billion.
