At last, the Philippine Stock Exchange offered to the public on December 2, 2013 the country’s first listed ETF or Exchange Traded Fund with the First Metro Philippine Equity Exchange Traded Fund, Inc. (FMETF).
After waiting for several months from the time First Metro Asset (FAMI) and PSE announced their planned ETF offer, I finally got to invest a few FMETF shares early this morning before things got busy at the office.
For investors with existing stock trading accounts, now’s the chance for you to avail the country’s first equity ETF (Exchange-Traded Fund) through their respective Philippine stockbrokers.
For first time investors and OFW’s based abroad, if you are interested to invest in ETF’s, you need to open a stock trading account to participate and buy shares.
What is an ETF or Exchange Traded Fund?
An Exchange Traded Fund (ETF) is a publically traded fund that is built to track or closely mirror the performance of a basket of securities, assets, or benchmark index.
It is actually a mutual fund or a collective investment scheme whose shares can be traded in a stock exchange.
The Fund aims to provide returns which would reflect the performance of the Philippine equities market by investing in a basket of securities which are included in the PSEi of the PSE. The portfolio of the Fund is to be rebalanced and reconstituted every six months in order to adjust to the current composition of the PSEi.
What are the Advantages of Investing in ETFs?
Immediate exposure to the whole market by buying one security
• Performance closely resembles that of its tracked Index
• Auto-Diversification as the fund owns various shares of stock
• Lower fund management fees than Mutual Funds
• Can be bought/sold throughout the day
For new investors, investing in ETF’s would make things easier for them. When investing in the ETF, it’s like investing in all 30 top Philippine stocks composing the PSE index minus the headaches and worrying which stocks to invest in because it already mirrors all of them in just one fund.
Here are the top 10 out of the 30 stocks that FMETF is invested in:
How To Start Buying ETF Shares?
For experienced stock investors, no need to open a separate ETF account. An investor will just have to place an order similar to buying regular/common shares. He/she just have to type the stock code FMETF when buying shares.
FMETF has a minimum boardlot of 10 shares.
For new investors, investing in ETF’s is easy.
First, you need to allocate funds that you want to invest. REMEMBER: Your minimum investment will depend on the price of the ETF and the PSE minimum board lot (10 shares).
Second, register with any of the 134 PSE brokers such as FirstMetroSec, COL Financial, BPI-Trade, Philstocks, etc.
Third, start buying and selling the ETF shares.
To understand more about ETF’s, watch this video from Investopedia:
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