BSP approves regulations for investment funds

The Bangko Sentral ng Pilipinas (BSP) has approved rules for the creation of more flexible trust funds that will allow investors to choose fee and payout structures that best suit their investment goals.

The BSP Friday published new rules on multi-class unit investment trust funds (UITF), in keeping with the goal of creating a wider variety of options for local investors.

Unlike most UITFs available to the public today, units in multi-class funds may be sold to investors in different ways based on the fees that banks charge and the payouts that investors stand to receive.

Bangko Sentral ng Pilipinas building. INQUIRER FILE PHOTO

Each class, the BSP said, would have separate net asset values per unit. This would be computed by dividing the total net assets of each class by its total outstanding units.

In managing UITFs, a bank gathers investors’ money in a single fund, which is then invested in various securities, including stocks, bonds and currencies, depending on the objectives of the fund.

There are various types of UITF available in the market. Some are invested solely in bonds and fixed-income securities, while ophers are designed for long-term investors whose goal is capital preservation. Others invest the public’s cash in riskier instruments such as equities, which can result in higher yields. Combinations of both are also available.

UITFs share certain features with mutual funds, although the former is sold only as a bank product, while the latter is incorporated.

“Before this, UITF regulations only allowed for a single structure, target participants, minimum participation and holding period,” BSP Governor Amando M. Tetangco Jr. told reporters. “The creation of the multi-class UITF is expected to promote operational efficiency and improve economies of scale for collective investments.”

A separate amendment to UITF rules was also approved by the central bank to promote transparency for investors.

The new circular, published simultaneously with the new rules on multi-class funds, requires banks to make daily disclosures on the net asset values per unit to clients.

Tetangco said this would “improve consumer protection and align (rules) with global best practices.”