BPI group tops mutual funds in May

Mutual funds managed by the fund managers of the Bank of the Philippine Islands (BPI) have reached a combined value of P61 billion at the start of May, the biggest combined pool in the country’s mutual fund industry.

The total industry assets under management (AUM) stood at P76.9 billion in end 2005.

BPI Investment Management Inc. (BIMI) president Fernando Jose Sison III said that all funds contributed to its significant growth, including its foreign currency-denominated mutual funds. BIMI is the fund manager for its US dollar and euro-denominated mutual funds.

The fund manager of the two other mutual funds is the BPI Asset Management Group (BPI-AMG).

A mutual fund is a pool of investments or cash from individual and corporate accounts handled by a fund manager or asset management group, which is generally a non-bank financial institution. A trust fund operates roughly the same except that it accepts higher initial investments, and it is managed by a bank’s trust department.

The four mutual funds are the Ayala Life peso fixed income fund (ALFM), the Philippine Stock Index Fund (Index Fund), the ALFM-Euro bond fund, and ALFM Dollar Bond Fund.

The ALFM, the industry’s single biggest mutual fund, reached a record P46 billion at the start of May from P40 billion end 2005.

The index fund expanded to P1.3 billion at the start of May this year from P500 million in end 2005.

The ALFM dollar fund grew to $104 million (approximately P5.6 billion) this month from roughly P4.5 billion in end 2005.

The euro fund, which was only launched last February, grew from 700,000 euros to euros two million.

"There are a lot of businesses engaged by Filipinos dealing in the euro currency. And there are also a lot of overseas Filipino workers (OFWs) and migrant Filipinos earning in euros, and most of them prefer not to convert these into Philippine pesos. They see long term benefits in keeping it that way," Sison said.

The BPI asset management group are the first to launch foreign-currency denominated mutual funds of significant proportions, as well as sustain the same. The Ayala-led financial institution obviously have the reach and mucscle to keep the foreign-currency funds viable.

Meanwhile, the concern of BIMI as well as the mutual fund industry is the slow adoption of the Securities and Exchange Commission (SEC) to the speedy growth of the indsutry.

Mutual funds are dependent on the aggressive marketing of its sales agency force. Sales agents or financial advisors are required to take examinations managed by the SEC.

These, however, are only offered twice to four times a year which fund managers say are not sufficient to meet the demands of the investing public and the expanding sales force of fund managers.

"There was a time when a prospective agent would just go the SEC and take written examinations through a computer which ironically was donated by the industry. The results would be out within 30 days," fund managers revealed.

They also lamented that roughly 60 percent of the examinations today are essay type.

"We respect the rebulator’s desire to ensure the sanctity of the examination process, but it must be able to cope with the demand of the industry and the investing public," they added.

They also expressed dismay over some tax structures governing the industry.

The country’s mutual fund industry is represented by the Invesment Company Association of the Philippines (ICAP), which is a member of the Financial Executives Institute of the Philippines (Finex).