The Stock Exchange launches the first debt-based fund

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CARACHI:

The Pakistan Stock Exchange (PSX) has announced the launch of its first debt-based exchange-traded fund (ETF) that will offer a fixed rate of return to investors.

“This ETF…is the first of its kind as it consists of a blend of government debt securities as the underlying asset class,” the PSX said in a statement. Trading of the newly launched ETF will begin on Monday. ETF is a basket of different securities. Its units are traded like stocks on stock exchanges around the world. ETFs are primarily designed to appeal to retail investors, who have a small amount to invest but want to buy a certain number of securities with a limited amount.

The HBL Total Treasury Exchange Traded Fund offers a diversified portfolio of fixed income government debt securities. The ETF’s underlying assets consist of cash treasury bills and cash equivalents (T-bills) and Pakistan Investment Bonds (PIB).

This is the seventh consecutive ETF on PSX. The six ETFs introduced earlier include stocks instead of debt stocks.

“Investing in government securities (by retail investors) is now as easy as investing in stocks on the PSX,” said the exchange’s Managing Director and CEO, Farrukh H Khan, at the launch of the new AND F.

“Now is a good time to launch this ETF as fixed income yields are high,” he added.

It used to be a distant dream for retail traders to invest in government debt securities, including Treasuries and GDPs.

The introduction of the fixed income ETF is part of efforts by the PSX and the mutual fund industry to provide a wide range of low-cost ETFs to investors, allowing them to easily gain exposure to different classes of assets and investment strategies.

“The purpose of introducing new products is to increase the savings of Pakistanis and generate volumes at PSX,” the statement added.

Published in L’Express Tribune, September 11e2022.

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