For the first time, Exchange Traded Fund (ETF) is expected to be launched on Pakistan Stock Exchange in next few weeks.

Initially two ETFs -one by NIT and other by UBL Fund are expected to be launched by the end of this month, Hassan Raza, General Manager, Product and Research, Pakistan Stock Exchange while briefing a group of reporters here on Thursday said.

The product would be offered by Asset Management Companies as per the guidelines of Securities and Exchange Commission of Pakistan (SECP)

ETF would be listed on Pakistan Stock Exchange and would be traded on the PSX similar to stocks. This product enjoys advantages of both mutual funds and stocks.

He said the ETF makes portfolio investment affordable for all investors along with the ability to buy and sell in the secondary market.

He said the cost of investing in ETF is generally lower than investing in mutual funds. The direct costs borne by investors in ETF are only the buying and selling exchange commission. There is no front-end or back-end load. Being passive strategies, ETFs management fees are lower as compared to the mutual funds and are disclosed in the ETF prospectus.

Regarding diversification, Hassan Raza said generally, underlying ETF investments are diversified as per the underlying index reducing the company specific and ETF diversification is fully transparent.

In key participants, Pakistan Stock Exchange will provide trading platform and will regulate trading and market maker and stock exchange would also act as index provider. Market Maker will be liquidity provider, Authorized Participants, Trustee (CDC) to look after the funds property and ensure that AMC acts in accordance with the investment objectives, trust deed, prospectus and securities law, Asset Management Company and Clearing Company (NCCPL) to ensure timely settlement and transfer of basket/unit to the respective entities.