BSP sweetens package for UITF investments

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is giving conservative clients of unit investment trust funds (UITFs) additional investment channels to make the product more attractive.

BSP Deputy Governor Chuchi Fonacier said the Monetary Board has approved a new policy allowing conservative clients of UITFs to invest in government securities instead of deposits only. “It will encourage UITF,” Fonacier said.

She said conservative clients were only allowed to invest in deposits in banks prior to the approval of the new policy.

With the new policy, Fonacier said conservative clients of UITF are now allowed to invest in government securities such as floating rate notes guaranteed by the national government. “It can now serve as an investment channel of UITFs,” she said.

UITFs are open-ended pooled trust funds denominated in pesos or any acceptable currency that are operated and administrated by a trust entity and made available by participation.

Latest data from the BSP showed UITFs dropped by 8.2 percent to P768 billion in 2017 from P831.3 billion in 2016 due to the decline in the market value of the total assets of UITFs.

The drop was not due to investors’ loss of interest on the product.

There are various types of UITFs that are now available in the market which include, among others, feeder funds, multi-class UITFs and UITFs with unit-playing feature that allows for a non-guaranteed stream of income to its participants.

Of all those various types of UITFs available in the market, the Money Market Funds remain the top choice by investors, indicating the investors’ preference for holding short-term securities.

In particular, Money Market Funds accounted for 71 percent or P555.3 billion of the total UITFs, largely invested or deposited in banks, followed by Equity Funds at 12.9 percent or P100.8 billion.

Money Market Funds accounted to 41.2 percent or 84.5 billion of the total UITFs of non-bank financial institutions (NBFIs) followed by “others” at 26.3 percent o P53.9 billion.