Thursday, December 19, 2013

Exchange Traded Fund: Added to My Stock Portfolio

PERA Bill and Exchange-Traded Fund are two things I am looking forward in the local stock market.

PERA Bill has been sign into law but it isn't implemented yet. The big guys at PSE said that it will be finally be in the market by January 2014. This is kind of like the 4O1k in the USA. All your investment and the profit of your investment will be tax-free provided that the contributor won't pull out his or her investment before 55 years of age. I believe that there will also be tax deduction by at least 5% of your total investment.

PERA bill is not yet in the market scene but Exchange-Traded Fund is!

What is Exchange-Traded Fund?

According to Investopedia,  Exchange-Traded Fund (ETF) is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange.

Put it this way, ETF is kind of like a mutual fund but behaves like a stock. No Net Asset Value (NAV) is calculated everyday but ETFs price change throughout the day as they are being bought and sold- kind of like a stock. 

What's amazing about ETF is you would pay the same amount of broker's commission and fee as you would with when you order regular stocks and you have the ability when to buy and when to sell those suckers. You are the boss and you are in control. In Mutual Funds, you have to pay for the manager's fee and you don't have the decision when to cut loss, sell or buy. I don't have to argue about " you are paying for the fund manager's expertise". Yah, I get that. I too have mutual funds but the bulk of my paper assets is not there. For me, 1.5 - 2 percent fee is huge.

First Metro Exchange Traded Fund (FMETF)
This is the Philippines very first ETF debuted last December 2, 2013. The opening net asset value per share was Php 99.20. It aims "to provide returns that would reflect the performance of the local equities market by investing in a basket of securities included in PSEi".

My Attempt to buy ETF

December 16, 2013 ( Monday)

I bid to buy FMETF with the price of Php 95.00 per share (1,250 shares) 

Verdict: FAILED

High: Php 96.95
Low: Php 95.05
Close: Php 95.80

Oh well, I'll try again tomorrow. 

December 17, 2013 (Tuesday)

Bid: Php 95.00 per share (1,250 shares)

High: Php 95.80
Low: Php 95.80
Close: Php 95.80

Verdict: FAILED

December 18, 2013 (Wednesday)

Bid: Php 95.00 per share (1,250 shares)

High: Php 96.00
Low: Php 95.80
Close: Php 96.00

Verdict: FAILED

December 19, 2013 (Thursday)

Bid: Php 95.80 per share . ( 1,250 shares)

Yah, I eventually gave in with the extra 80 cents. Haha!

Verdict: Officially added to my portfolio!

Here is hoping that there will be more introduction of different ETFs in the Philippine stock market. ETF in real state sector maybe or how about banks? Not bad! We will see! 

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