Bank of the Philippine Islands has rolled out two new investment funds that may be the only such instruments in the country to track the performance of key Western stock indices—the S&P500 and Euro Stoxx 50.
The funds—BPI US equity index feeder fund and BPI European Equity index feeder fund—were launched by BPI Asset Management and Trust Group (AMTG) last week to mark the bank’s 163rd anniversary. The funds are available to clients through any BPI branch for a minimum initial investment of $1,000.
The bank will pool the investments before it “feeds” it into the master fund, where all portfolio investments and trading activity are overseen. Such a fund entails better trading and operating costs due to economies of scale.
“We want to offer Filipino investors the opportunity to get focused investment exposures in major developed markets such as US and Europe. After the recent run-up in Philippine equities, investors could be looking to diversify offshore using a locally domiciled fund such as these UITFs (unit investment trust funds),” BPI senior vice president and head of AMTG Maria Theresa Marcial-Javier said in an e-mail.
UITF is a professionally managed collective investment product offered by banks’ trust units similar to a mutual fund. The difference is, participation comes in the form of units rather than shares.
“These products are suitable for investors with aggressive risk profile and long term view—investors who can and are willing to accept higher volatility for higher potential returns,” she said.
These funds are meant for individuals, and it may address long term investment goals such as retirement.
BPI US equity index feeder fund will track S&P500, an index of 500 stocks chosen for market size, liquidity and industry grouping.
The BPI European equity index feeder fund will track the Euro Stoxx 50 index, Europe’s leading blue-chip index for the euro zone. This fund targets investors who want to take positions for Europe’s recovery.
The feeder funds are not deposit products and are not obligations of, guaranteed, or insured by BPI or its affiliates. Also, the funds are not insured by the Philippine Deposit Insurance Corp. Due to the nature of the investments, potential yields cannot be guaranteed. As such, any income or loss arising from market fluctuations and price volatility of the securities held by the funds is for the investor’s account.