The First Metro group plans to list the country’s first Philippine Stock Exchange index-tracking exchange traded fund (ETF) with shares worth P3 billion on the local bourse by Dec. 2.
The Securities and Exchange Commission recently approved the registration and offering to the public by First Metro Philippine Equity Exchange Traded Fund Inc. (FMETF) of its authorized capital stock of P3 billion, consisting of 30 million common shares, at a par value of P100 each.
First Metro ETF, sponsored and organized by First Metro Investment Corp., signed Monday the index provider and listing agreements with the PSE.
The index provider agreement states that PSE is allowing First Metro ETF to track the PSEi while the listing agreement outlines First Metro ETF’s responsibilities as a listed company.
“We are very excited to roll out in the market a history in the making with the listing of the First Metro ETF before the end of the year. The timing is just appropriate as we anticipate market correction and may therefore be a good time to but the index that will comprise our index ETF,” said FMIC president Roberto Juanchito Dispo.
The seed money for the fund is P750 million, equivalent to the amount of shares that the public can trade at the secondary market on Dec. 2, when First Metro ETF lists all of its P3 billion worth of shares.
Dispo said First Metro ETF’s P3-billion capital might be raised to P10 billion by applying for shelf registration of new shares. The company is anticipating brisk investor take-up given the financial market’s liquidity.
Like mutual funds, an ETF pools funds by selling shares to the investing public. But unlike mutual funds, the price of an ETF is quoted real time so investors will immediately know how much they are buying or selling their ETF shares for. ETF investors may buy or sell shares through trading participants.
First Metro’s PSEi-tracking ETF aims to “provide returns that would reflect the performance of the Philippine equities market by investing in a basket of securities included in the Philippine Stock Exchange index or PSEi.
The fund will at all times invest 80 percent of its assets in the highest 15 to 20 weighted securities of the underlying PSEi. The remainder may be invested in liquid investments, including cash, cash equivalents, money market instruments and shares of money market funds advised by First Metro Asset Management Inc. (Fami).
Fami will be the fund manager and principal distributor while the custodian bank is HSBC. IGC Securities and First Metro Securities Brokerage Corp. are authorized participants in the creation and redemption of the fund.