BPI to issue P250-M Exchange Traded Funds

MANILA, Philippines - The Bank of Philippine Islands (BPI) is set to issue some P250 million worth of Exchange Traded Fund (ETF) to offer another kind of mutual fund product to its clients, a bank official said.

BPI Asset Management and Trust Group senior vice president Maria Therese Marcial-Javier told reporters over the weekend that the P250 million would just be an initial minimum  required capital for the creation of ETF but they would probably increase this amount depending on the demand of the market.

“We see demand. We see strong demand here and it will initially come from institutional investors and the retail investors will be the ones who will be trading in the market,” she said.

ETF is a special kind of mutual fund that could be traded as a normal stock in an exchange. It experiences price changes throughout the day as they are bought and sold.

It was believed that the creation of ETF would allow investors to have more investment options aside from the existing stocks in the market.

Javier said as soon as the ETF guidelines are approved, they would also be putting up a special vehicle to handle the ETF function of the bank.

“I think we’ve reserved the name. But we still have to identify all the parties. We have to put in the usual  prospectus, all the details, terms and conditions before we file but we want to do it soon,” she said.

After incorporating a company to handle the ETF at the Securities and Exchange Commission (SEC), Javier said they would go to the PSE to list the shares.

Javier said prospects for these kind of new mutual fund products are bright as interest rates continue to fall.

She said they expect rates to sustain its downward trend for the rest of the year.

With this, Javier said they are seeing a possibility of another cut on Bangko Sentral ng Pilipinas’ special deposit account (SDA) rates by 50 basis points within the year.

BPI Asset Management’s assets under management (AUM) for the first quarter of 2013 reached P758 billion, up by 10 percent from the same period last year.