The Pakistan Stock Exchange (PSX) has welcomed its first ETFs with the launch of the UBL Pakistan Enterprise ETF (UBLFETF PA) and the NIT Pakistan Gateway ETF (NITGETF PA).
The PSX has welcome its inaugural ETFs.
PSX joins a growing list of stock exchanges around the world offering ETFs.
The exchange’s inaugural ETFs have been issued by UBL Funds and National Investment Trust.
The UBL Pakistan Enterprise ETF tracks the UBL Pakistan Enterprise Index which reflects the performance of the nine largest companies that feature in the top 25 companies in the KSE-100 Index (excluding oil & gas sector) as measured by both free-float market capitalization and traded volume.
Constituents are weighted by free-float market capitalization subject to a cap and floor of 16% and 3.5% respectively. The index is reconstituted semi-annually and rebalanced quarterly.
Yasir Qadri, CEO of UBL Funds, said, “With valuations where they are, UBL Pakistan Enterprise ETF may be a suitable product for investors who wish to enter the market without having to worry about stock picking. The fund invests in a basket of blue-chip stocks which are largely not sensitive to oil prices.”
UBLFETF comes with a management fee of 0.65%
The NIT Pakistan Gateway ETF tracks the NIT Pakistan Gateway Index, an index reflecting the performance of stocks that represent top 50% free-float market capitalization of KSE-100, subject to various liquidity requirements. The fund currently has 12 constituents.
Adnan Afridi, Managing Director of NIT, said, “NIT’s Pakistan Gateway ETF will provide an attractive investment avenue for both large and small investors. Given the current downturn in the market, the NIT Gateway ETF presents a value opportunity for investors to take a diversified exposure to the Pakistan market”.
NITGETF comes with a management fee of 0.40%
Commenting on the launches, Aamir Khan, Chairman of the Securities & Exchange Commission of Pakistan, said, “The introduction of ETFs is a big leap for asset management industry and stock market in Pakistan as 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. 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”.
Farrukh Khan, Managing Director of PSX, added, “It is an exciting development and 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. Now that the ETFs have been introduced, we are hopeful that it will make the market more attractive to all investors, especially retail investors”.
He continued, “Globally ETFs are an integral part of product offerings in the capital markets. It is a product with significant presence in over 47 countries. Internationally, there are over 8,000 ETFs with aggregate assets under management of about USD 6.5 trillion by the end of 2019 and estimated to grow to around USD 7.6 trillion by the end of 2020. Looking at the growth trends of ETFs globally, I am confident that 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 in the Pakistan market”.