Pakistan, Karachi, March 2020:
UBL Fund Managers has launched, jointly with PSX the first ever Exchange Traded Fund (ETF) in Pakistan – “UBL Pakistan Enterprise Exchange Traded Fund”. The Fund will track the newly launched UPP9 index; a basket of 9 stocks selected on the basis of free float market capitalization and traded value. The Fund will focus on shares of local businesses and have little or no exposure in stocks that are directly sensitive to oil prices.
As markets react to the coronavirus pandemic, globally, valuations have dropped to an unprecedented rock bottom. Many advisers across the world are advising their clients to buy units of ETF’s and wait for the environment to normalize. In every threat lies an opportunity itself and needless to say that this advice applies well to Pakistani investors.
Investments in ETF’s bring their own advantages; they are more suitable when compared to a single stock because they offer diversified exposure of stocks and sectors, thus more likely to perform in comparison to an individual stock.
ETF’s are also cheaper than most equity mutual funds. In Pakistan most leading fund managers tend to outperform benchmark indices and deliver value in return of fee charged, however the same is not true globally. They are also easier to invest in for stock market investors who are already clients of brokers; no additional paperwork is required, an order with the broker is all that needs to be placed, just like when purchasing any ordinary share.
UBL Funds has appointed one of the leading brokerage houses of Pakistan, JS Global as a market maker , who in turn offer an unmatched state of the art advanced customer facilitation platform to suit the necessity of investors for easy access to their investments. The facility they provide on the buy and sell side of the units of ETF’s are just a few clicks away for investors. Please note that no such market makers are operative in normal shares. It is, hence, an added advantage of sorts.
JS Global and other market makers who may join in the future will also benefit from arbitrage opportunities besides the income from spreads on buy and sell.
Units of the UBL Pakistan Enterprise Exchange Traded Fund will be similar to a listed share and have all the features. It would become eligible for margins and can be bought on margin through a PSX broker in later stages.
Globally, ETF’s are now the most popular way to access the stock market. A very substantial portion of the retail market invests in the stock market by buying units of ETF’s. Global equity investors also take exposure into different countries through ETF’s.
The launch of ETF’s is a milestone for asset managers as well as the PSX. It will help pave the way for many future listings and play a significant role in the ongoing development of capital markets in Pakistan.
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