Metrobank unit plans consumer-based fund

Local investment bank First Metro Investment Corp. is considering the dual listing of its pioneering First Metro Philippine Equity Exchange Traded Fund Inc. (FMETF) on the Singapore Exchange (SGX) next year.

FMIC, a unit of local banking giant Metrobank, is also working to introduce to the local market two potential new ETFs: One based on a prospective consumer index and another based on an index of bonds, according to FMIC president Roberto Juanchito Dispo.

Dispo said FMIC recently joined an international summit organized by the Development Bank of Singapore, during which the possibility of listing the Philippine Stock Exchange index-tracking FMETF—the first ETF in the country—was raised.

“There’s a clamor on the DBS side if we can potentially list on a dual basis the FMETF,” Dispo said.

FMETF aims to provide returns that would reflect the performance of the local equities market by investing in a basket of securities included in the PSEi.

At the same time, Dispo said FMIC was requested to look into the possibility of launching an ETF that was sectoral based, focusing on the consumer sector.

“That will be put into consideration by First Metro,” Dispo said. “We believe it makes sense to come up with an ETF that will track the consumer sector in the PSEi because the country’s success story is underpinned by strong consumer growth.”

Dispo said FMIC was likewise “in the thick of preparations” and in the process of getting regulatory clearance on an ETF that will track the bond index. He said an ETF with bonds as underlying indices would be suitable here, noting that in the Philippine context, government securities trading was very active in the primary and secondary markets.

“We’ve seen how the bond market, corporate issues have been growing through the years so it makes sense to introduce the country’s first ever bond ETF,” he said.

The introduction of a second ETF after FMETF might happen toward the end of this year, Dispo said, adding that it would be easier to launch a consumer-based index ahead of a prospective bond index.

He said a consumer-based ETF would be easier to do. At present, the PSE does not have a consumer index among its sub-indices but the local bourse had long been studying the creation of an index based on key consumer stocks.

On the dual listing of FMETF in Singapore, Dispo said this might take a bit more time.

“We’ll still review the listing rules and regulations in SGX. Of course DBS will assist us in that regard but the window may be too narrow within the year,” Dispo said.

If regulations of the SGX would allow it, the dual listing could happen early next year, Dispo said.

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 how much the ETF shares are worth. ETF investors may buy or sell shares through trading participants.