PSX unveils exchange traded fund to attract small investors

KARACHI: Pakistan Stock Exchange (PSX) on Tuesday unveiled a much-awaited exchange traded fund (ETF), a novel investment avenue in the country combining attractive equity returns with a mutual fund’s diversity.

Initially, two ETFs, namely UBL Pakistan Enterprise ETF of UBL Funds and NIT Pakistan Gateway ETF of National Investment Trust (NIT), were introduced. Securities and Commission of Pakistan (SECP) Chairman Aamir Khan said the ETF introduction is a big leap for asset management industry and stock market in Pakistan.

“This product offers significant growth potential due to its transparent nature, low costs and embedded ability to track the index by following a passive investment strategy,” Khan said, addressing the ETF’s virtual launch.

“I am confident that the launch of UBL Pakistan Enterprise ETF and NIT Pakistan Gateway ETF will fill the void for a low cost exchange traded product and would be instrumental in enhancing the market depth and liquidity.”

SECP chairman urged the industry players to focus innovation and new product development, proactive use of technology for expanding market outreach and governance and prudence.

Internationally, there are more than 8,000 ETFs with aggregate assets under management of about $6.5 trillion by the end of last year, and estimated to grow to around $7.6 trillion this yearend. ETFs are an integral part of product offerings in the capital markets. The product has a significant presence in over 47 countries.

PSX Managing Director Farrukh Khan said a new chapter has been added after a very long time to the narrative of the Pakistani stock market in the form of ETFs.

“The reason that it all took time was the challenge in finding optimal solutions acceptable to all stakeholders and which were also in the best interest of investors,” Khan said. “Now that the ETFs have been introduced, we are hopeful that it will make the market more attractive to all investors, especially retail investors.” PSX MD said there is great potential for ETFs in the Pakistan market as they are an ideal, cost-effective instrument for investors who wish to take advantage of the attractive valuations.

Khan hoped the ETF would prove to be an attractive avenue of investment, especially for the small investors, given the current economic situation prevailing at home and around the world.

The virtual launch took place amid high hopes and optimism. It was believed that the first two ETFs introduced at the PSX would prove to be a harbinger of success and prosperity for all the stakeholders and investors of the country’s capital market.

UBL Funds CEO Yasir Qadri said the launch is another first for UBL Funds with a tradition of launching new products. JS Global is the market maker behind the ETFs. JS Global CEO Kamran Nasir said the company is playing a leading role in the launch of ETFs.

“I would like to appreciate the role played by SECP and PSX in creating an enabling environment for the development of such new products. I would also like to acknowledge the untiring efforts of the management of UBL Funds and NIT without which this would not have been possible,” Nasir said.

“We commit to SECP, PSX and investors that we will continue to strive to serve the interest of capital markets of Pakistan to the best of our capabilities in the days to come.”