Tax disparities to be removed for investment in funds

KARACHI: The government is removing tax disparities to promote investment in exchange traded funds – a new avenue for retail and institutional investors, as it dovetails equity returns with a mutual fund’s diversity, a top official said on Tuesday.

Securities and Exchange Commission of Pakistan (SECP) Chairman Aamir Khan said the commission is determined to create a more competitive and efficient playing field to exchange traded funds (ETFs) through addressing tax disparities, achieving tax credit and allowing investment through special convertible rupee accounts.

“SECP is also taking measures to encourage more market makers to come up, increasing awareness and expanded outreach of ETFs and working to make ETFs available not just at ready counter, but at each and every counter,” Khan said, addressing a ceremony to mark the launch of two new ETFs at the Pakistan Stock Exchange (PSX).

Currently, ETFs include NIT Pakistan Gateway Exchange Traded Fund, UBL Pakistan Enterprise Exchange Traded Fund, Meezan Pakistan Exchange Traded Fund, and NBP Pakistan Growth Exchange Traded Fund.

SECP chairman said another set of ETFs were under approval process, demonstrating that the market and investors are anticipating growth over the near term.

PSX CEO Farrukh Khan said the launch of ETFs is an important development in the PSX growth story. Globally ETFs are now probably the single largest asset class, worth over $7 trillion in market capitalisation.

“So, it is not only exciting but it is imperative that we bring this innovative instrument to investors in Pakistan’s capital markets,” Khan said. “We hope that this product will be a popular investment option for the retail and institutional investors.”

PSX chief urged brokers and asset management companies to produce research and educate investors about the attractive investment product. “This has the potential to increase share ownership and gains from the stock market to a broader segment of investors.”

NIT Managing Director Adnan Afridi said the ETFs will go a long way in providing depth to the capital markets of the country. UBL Fund Managers CEO Yasir Qadri said the SECP has been supportive of the launch.