FMIC unit first to offer ETFs

MANILA, Philippines - The Securities and Exchange Commission (SEC) has allowed First Metro Philippine Equity ETF Inc. of the Metrobank Group to register and offer shares to the public, making it the first firm to offer the new investment vehicle called exchange-traded funds (ETF).

Specifically, First Metro Philippine ETF, a subsidiary of Metrobank’s investment banking arm First Metro Investment Corp. (FMIC), can now offer its entire authorized capital stock of P3 billion consisting of 30 million common shares at a par value of P100 apiece.

ETFs are securities and investment instruments that monitor a commodity of assets like an index fund but trades like a normal stock in an exchange.

“First Metro Philippine 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 (PSEi),” the company said.

“The portfolio of the fund is to be rebalanced and reconstituted every six months in order to adjust to the current composition of the PSE,” it added.

Under its business plan, the fund will at all times invest at least 80 percent of its assets in the highest 15 to 20 weighted securities of the PSEi.

“The fund may invest the remainder of its assets in liquid investments, including cash, cash equivalents, money market instruments and shares of money market funds advised by First Metro Asset Management Inc. (FAMI),” the firm said.

Shares of the fund can be bought through a primary offering or in the secondary market at the current market price of the shares in the PSE.

“Investors may buy or sell shares of the fund through trading participants of the PSE in lots prescribed in accordance with the trading rule of the PSE at the quoted market price,” the company said.

FMIC will initially invest P750 million into the fund while fund manager is FAMI. First Metro Securities Brokerage Corp. will act as the market maker while PSE will serve as the index provider.

ETFs are seen to offer several advantages and investment options to investors, including liquidity especially for those who cannot directly access specific sectors in the market due to a country’s specific regulatory environment.