PSE’s first equity-traded fund yields 25.94% in 1 yr

A year after the debut of First Metro Philippine Equity Exchange-Traded Fund (ETF), the country’s pioneering ETF, this new asset class is gaining ground.

First Metro ETF has steadily risen since its listing on the local stock exchange in end-2013, matching the upswing of its underlying barometer, the Philippine Stock Exchange index (PSEi).

“The performance of the First Metro ETF has grown immensely over the past year. When it was listed on the PSE, its net asset value per share (NAVps) was at 99.41. On its anniversary date on Dec. 2, it posted a year-to-date return of 25.94 percent with a NAVps of 118.67. This has caught the investing public’s attention,” said Gonzalo Ordoñez, president of First Metro Securities Brokerage Corp., the market maker and one of the authorized participants of the First Metro ETF.

“The growing number of investors in the first-ever, and so far the only, exchange-traded fund in the country is a reflection of the investing public’s demand for new and exciting financial products that suit their needs,” Ordoñez added.

First Metro ETF offers an investment option that allows a collective investment scheme to be traded in the PSE. Designed to track the performance of the PSEi, it is seen as a cost-efficient way of diversifying one’s portfolio, allowing investors access to a broader market at lower expense ratios.

“Despite the disasters that hit the country in the last quarter of 2013, the Philippine economy showed resiliency for the greater part of 2014. The stock market elevated, with price-earnings (P/E) ratio of 19x, the world’s second highest next to India. The Philippine sovereign rating was also upgraded to Baa2 (one notch above minimum investment grade) from Ba3 by Moody’s.

A P/E ratio of 19x means that investors are paying 19 times the amount of money they made or expect to make from this market.

“With the increase in government spending this year, made more compelling by the presidential elections in 2016, we expect the PSEi to hit the 8,500 mark, propelling the index-tracking First Metro ETF to mirror this upward movement,” Dispo added.

It was earlier reported that FMIC was planning to launch a local consumer index-based ETF and a peso-denominated ETF that tracks S&P 500, the latter meant for investors seeking to take a position in US equities without taking any foreign exchange risk.

“First Metro, true to our thrust and advocacy to be the prime mover in the development of the Philippine capital markets, will continue to introduce new investment products for the benefit of the Philippine investors,” Dispo added.