KARACHI: Pakistan Stock Exchange (PSX) held a gong ceremony on Friday to officially mark the launch of JS Momentum Factor Exchange Traded Fund (JSMFETF).
This ETF which is the fifth ETF on PSX was launched on Friday. The participants of the ceremony included Chairperson PSX, Dr Shamshad Akhtar; MD and CEO PSX, Farrukh H. Khan; CEO JS Investments Limited, Iffat Zehra Mankani; CEO and President JS Bank, Basir Shamsie; CEO JS Global, Kamran Nasir along with other esteemed dignitaries, heads of banking and non-banking financial institutions including brokerage houses, insurance companies and other financial services & media personnel.
Speaking at the occasion, MD PSX, Farrukh Khan said the ETFs were an important product in global capital markets and it was exciting to see new and innovative ETFs being launched on PSX. Globally, ETFs command a large asset base worth over $9 trillion. It is an exciting development that we have the fifth ETF listed on PSE.
He said JS Momentum Factor ETF which does not track a market-capitalisation based index is a valuable addition on the ETF sector of the bourse for attracting retail and institutional investors. He congratulated JS Investments on launching this innovative new ETF.
He urged the brokers and AMCs to produce research and educate investors about this unique and attractive investment product. He emphasised upon the broker community to encourage and promote the ETFs to their current and new investors. This will add depth and liquidity to the market whilst presenting a suitable investment option for investors who want to diversify their portfolios cost-effectively. ETFs also allow savvy investors to focus on specific sectors or attributes of the market, he said.
Speaking at the launch of the new ETF, the CEO of JS Investments, Iffat Mankani, said the JS Momentum Factor ETF is Pakistan’s first Smart Beta Exchange Traded Fund and its launch would pave the way to a durable investment style that displays both active and passive investment management features.
JSMFETF follows a Factor Investing approach that tilt exposure towards ‘factors’ in a rules-based portfolio-building process that systematically selects, weights, and rebalances portfolio holdings based on factors or characteristics versus a market capitalization approach. Some of the examples of the factors are dividend yield, value defined by low P/E ratios of P/B multiple or ‘Momentum’ as in the case of this fund and have been proven historically to capture market inefficiencies and in turn has been able to deliver attractive risk-adjusted returns, enhanced efficiency, and transparency. “The evidence for momentum in markets is very strong and is supported by almost two decades of academic research in US equities as well as markets outside the US, our back tests of the ETF strategy reveal that momentum has also outperformed our local stock index i.e. KSE-All-share index by six percent annualized over 2001-2021”, she said.
The ETF is an investment product which combines the characteristics of both mutual funds and individual securities. In other words, ETF offers the opportunity to invest in a portfolio of securities that provides the same diversification benefits of mutual funds with the liquidity and trading flexibility of stocks.
JS Momentum Factor ETF (JSMFETF) seeks to track the investment results of JS Momentum Factor Index (JSMFI), composed of PSX large- and mid-capitalization stocks exhibiting relatively higher price momentum. This is based on the premise that stocks with positive momentum tend to continue to outperform the KSE-All Share Index.
JS Momentum ETF is an approved investment product by the Securities and Exchange Commission of Pakistan (SECP) and is traded on the stock exchange under the ticker ‘JSMFETF’.
Copyright Business Recorder, 2022