Filipino Fund to restructure

Filipino Fund Inc., the only publicly-listed mutual fund at the Philippine Stock Exchange, is on its way to a corporate reorganization that would pave the way for the spin-offs of its listed stock holdings into an open-end fund.

The restructuring plan was laid out last year and was approved by the company’s board last September. This month, its investment manager BPI Investment Management Inc. said the FFI shareholders will hold a special meeting to approve the change.

FFI officials said the unbundling of the asset holdings of the company will, in effect, improve the values of its shares and reflect on the underlying assets of the company.

"The listed equity assets will be spun off into an open-end fund that will seek to mirror the objectives of FFI but with the difference that instead of being a closed fund this will now be an open-end fund which will not be listed," the officials said. The new fund, nevertheless, will then invest in component stocks of the PSE index.

Meanwhile, the non-listed equity investments and property holdings of FFI will be kept as a separate pool while FFI, with some other assets, will continue to be listed on the PSE.

FFI said there are negotiations ongoing for the disposal of some of the real estate assets.

As of June 30, 2002, FFI’s portfolio of listed equities include blue chips BPI, Ayala Corp., Ayala Land, PLDT, Meralco B, San Miguel B, First Philippine Holdings, SM Prime Holdings, ABS CBN Holdings, Globe Telecom, and Jollibee warrants.

It also has investments in unlisted share of stocks in Batangas Asset Corp., Roxas Land Corp. and Universal Leisure Club and property holdings with four office units at the Ayala Life FGU Bldg.

In addition, FFI has fixed income investments in Global Philippine Fund as well as in government securities.

Last month, the PSE said it is preparing for the eventual listing of more mutual fund companies in its continuing drive to develop and expand the financial products available to the investing public.

The exchange is currently studying the marketing and possible listing of more mutual funds or managed investment funds, which at present is limited to FFI and the New York-traded First Philippine Fund.

A mutual fund is an investment company or a special purpose investment vehicle that pools money from shareholders for investments in a portfolio of securities. Mutual funds can be categorized in three basic categories: a bond fund which invests primarily in debt securities or bond issues; an equity or stock fund which deals in equities or shares of stocks; and a balanced fund which mixes the debt and equity component depending on market conditions.

There are about 20 mutual fund companies in the Philippines, almost equally divided into bond funds, equity funds and balanced funds. These include Philam Bond, Philam Strategic Growth Fund, PhilEquity Fund, Sunlife’s SLC Prosperity Philippine Equity Fund, United Fund, the GSIS Kabuhayan Fund, First Galleon Fund, Citisec Growth and Income Fund, All Asia Fund and the Ayala Life Fixed Income Fund.