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ETF - Exchange-traded funds coming to RP bourse

By Daxim Lucas
Philippine Daily Inquirer
First Posted 17:31:00 03/09/2008

INVESTORS in the local equities market may soon be able to buy securities that mimic the performance of indices or baskets of stocks as part of the bourse's drive to broaden its client base.

In a statement, the Philippine Stock Exchange (PSE) said that it recently drew up draft rules that it proposes to govern the listing of exchange-traded funds (ETFs).

An ETF is an open-end fund that issues and redeems securities on demand, whenever investors put money into or take it out of the instrument. The ETF tracks indices or a basket of securities that are listed and traded in the PSE or on a foreign stock exchange acceptable to the PSE.

It is designed to track the price and yield performance of its underlying index, which may be categorized as a broad market, a sector or industry, a single country or region, or fixed income instruments.

PSE president Francis Lim said the decision of the PSE board to draft the ETF rules formed part of its program "to assure the market's sustained growth" by enticing more investors with an expanded menu of PSE products and services.

The bourse is urging all concerned groups to comment on the draft rules, which can be accessed through the PSE website. After the public comments are considered, the PSE will submit the draft rules to the Securities and Exchange Commission for approval.

source: http://business.inquirer.net

ETF soon atPSE from tolome512 on Comiqs

Exchange-Traded Funds (ETFs)

Exchange-traded funds, or ETFs, are investment companies that are legally classified as open-end companies or Unit Investment Trusts (UITs), but that differ from traditional open-end companies and UITs in the following respects:

• ETFs do not sell individual shares directly to investors and only issue their shares in large blocks (blocks of 50,000 shares, for example) that are known as "Creation Units."
  
• Investors generally do not purchase Creation Units with cash. Instead, they buy Creation Units with a basket of securities that generally mirrors the ETF’s portfolio. Those who purchase Creation Units are frequently institutions.
  
• After purchasing a Creation Unit, an investor often splits it up and sells the individual shares on a secondary market. This permits other investors to purchase individual shares (instead of Creation Units).
  
• Investors who want to sell their ETF shares have two options: (1) they can sell individual shares to other investors on the secondary market, or (2) they can sell the Creation Units back to the ETF. In addition, ETFs generally redeem Creation Units by giving investors the securities that comprise the portfolio instead of cash. So, for example, an ETF invested in the stocks contained in the Dow Jones Industrial Average (DJIA) would give a redeeming shareholder the actual securities that constitute the DJIA instead of cash. Because of the limited redeemability of ETF shares, ETFs are not considered to be—and may not call themselves—mutual funds.
  

An ETF, like any other type of investment company, will have a prospectus. All investors that purchase Creation Units receive a prospectus. Some ETFs also deliver a prospectus to secondary market purchasers. ETFs that do not deliver a prospectus are required to give investors a document known as a Product Description, which summarizes key information about the ETF and explains how to obtain a prospectus. All ETFs will deliver a prospectus upon request. Before purchasing ETF shares, you should carefully read all of an ETF’s available information, including its prospectus.

Currently, all ETFs seek to achieve the same return as a particular market indexes. Such an ETF is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An ETF will invest in either all of the securities or a representative sample of the securities included in the index.

source: www.sec.gov/answers/etf.htm

Exchange Traded fund from tolome512 on Comiqs

Pag-IBIG Housing Bond

WHAT ARE Pag-IBIG HOUSING BONDS

Pag-IBIG Housing Bonds (Series 2007)* are bonds issued by the Home Development Mutual Fund (HDMF) to finance its housing loan program. The Bonds have a term of five (5) years and one(1) day.

*Issuance of the Pag-IBIG Housing Bond is contingent upon the prior endorsement of the Department of Finance and the approval by the Monetary Board of the Bangko Sentral ng Pilipinas and the finalization of the HCG Contract of Guaranty.

WHAT ARE THE OTHER FEATURES OF THE BOND?

• Allowable investment of insurance companies
• Acceptable collateral for a developer's loan with Pag-IBIG Fund
• Acceptable deposit in lieu of surety bond for collecting agents of Pag-IBIG Fund and
• For developer-investors, the Bonds are deemed sufficient compliance with Section 18 of R.A. 7279, subject to pertinent guidelines.

Eligible bondholders shall also be entitled to participate in an annual raffle draw with minimum of two (2) units of House and Lot packages/ Lot worth P1 Million each. For every P10,000 Bond held, an eligible bondholder is entitled to one raffle number.

Bond holder eligible to the annual raffle draws are:

• Individuals
• Retirement Fund
• Provident Fund
• Cooperatives

WHO CAN INVEST IN THE BONDS?

Members and non-members of Pag-IBIG, Filipinos and foreign nationals, corporations, developers and insurance companies may invest in the Pag-IBIG Housing Bonds. All Bond investors will be required to open and maintain a deposit account with either the Development Bank of the Philippines (DBP) or Land Bank of the Philippines (LPB).

Denomination of P10,000, P100,000, P500,000, P1,000,000 and P10,000,000 are available to all investors. There is no limit as to the amount of Bonds an investor can purchase.

WHAT IS THE INTEREST RATE OF THE BONDS?

An investor will be paid on a semi-annual basis a fixed interest rate which is tax-exempt by virtue of the Home Guaranty Corporation (HGC) guarantee on the Bonds. The interest earnings shall be automatically credited to the savings account of the bondholders on record with DBP or LBP. The actual rate on the bonds will be based on prevailing rate on Interest Rate Setting Date

Sample Computation ( Interest rate of 5.0% per annum)

Amount Invested	:PhP 10,000.00
Coupon Rate	:5.00% net (**)
Semi-Annual Interest Earnings(***)	:Php 250.00

(**) Indicative interest only and actual interest rate will be based on prevailing rate on Interest Rate Setting Date.

(***) Exempt from the payment of the 20% final with holding tax

WHAT ARE THE INVESTMENT SECURITY FEATURES OF THE BONDS?

The Home Guranty Corporation (HCG) provides a cash guaranty on the entire amount of principal and interest of up to 10.50%. The Guaranty of HGC carries the unconditional guaranty of the Republic of the Philippines. In addition, a debt repayment fund shall be maintained with DBP Trust Services.

AFTER THE PUBLIC OFFERING, CAN AN INVESTOR STILL BUY THE BONDS?

Yes. The Bonds ca still be bought at the secondary market through DBP and LBP at prevaling market rate.

WHAT IS THE PROOF OF OWNERSHIP OF THE Pag-IBIG HOUSING BONDS?

An investor will be issued a Pag-IBIG Housing Bond certificate by the DBP Trust Services.

CAN THE INVESTOR SELL THE BONDS EVEN BEFORE THE MATURITY?

Yes. Since the Bonds are negotiable, an investor can sell these to other interested investors through the DBP or LBP even before maturity.

HOW CAN THE BONDS BE REDEEMED UPON MATURITY?

The Facility Agent shall remit the maturity value to LBP and DBP to further credit to the bondholders' respective deposit account maintained either with LBP or DBP.

WHERE AND HOW CAN ONE PURCHASE THE BONDS?

An investor can purchase the Bonds from selected DBP or LBP branches nationwide.

Requirement are as follows:

For individual investors

• Duly accomplished Application to Purchase Pag-IBIG Housing Bond
• TIN and 2 valid IDs ( bearing photo and signature) Cash or authority to debit deposit account either with LBP or DBP
• Manager's check

For corporations

• Copies of SEC registration, Articles of Incorportaion and By-laws
• Pertinent board resolution authorizing the purchase of the Bonds indicating the authorized signatories and the specimen signature card

Investors will also be required to open a deposit account either with DBP or LBP to facilitate crediting of the interests and the principal upon maturity of the Bonds.

source: www.pagibigfund.gov.ph