Philam unit launches dollar-denominated mutual fund

MANILA, Philippines—The fund management unit of the Philam group unveiled last week a new dollar-denominated mutual fund targeting investors seeking better returns by participating in a pool of bonds and equities invested across Asian emerging markets.

Pami Asia Balanced Fund, which has been licensed by the Securities and Exchange Commission to operate as an open-end investment company, now has about $8.5 million in assets under management and a return of about 5 percent a year.

“This is for those who are really looking for US dollar outlets. As you know, most of them are just keeping it in dollar time deposits and even dollar bond funds are not doing very well so there’s a lot of interest,” Pami executive vice president Gina Morales said in an interview during the launch of the new mutual fund last week.

“Right now, investors are looking for yields,” she said. “Also, we believe in diversification.”

While it may now be more lucrative to invest directly in peso-denominated instruments, there might still be some people who have already made a decision to keep some of their funds in dollars and were now looking for investment outlets for those, she pointed out.

The minimum investment in the mutual fund is $5,000 and additional purchase is possible for at least $1,000.

An open-end investment company is one that issues new shares whenever investors want to buy and these shares are redeemable whenever the investor wants to sell them back to the issuing company.

The new fund aims to provide investors with income and long-term capital appreciation through investment in equities, equity-related securities and debt securities of issuers across Asia-Pacific outside Japan. Specifically, the fund aims to cover issuers across Australia, China, Hong Kong, India, Indonesia, Korea, Malaysia, New Zealand, the Philippines, Singapore, Taiwan and Thailand.

The ideal mix between bond and equities, Morales said, was 50-50, but she said the fund would have the flexibility to add a 20-percent weight either way depending on which asset class would have better potential.

The minimum holding period for investors buying shares in the mutual fund was six months, she said.

She said the fund was “underweight” on China and India relative to fund benchmarks because of inflation concerns in those markets but “overweight” in the case of the Philippines. She noted that the “overweight” rating on the Philippines was also partly due to the favorable local currency play against the dollar.

Pami, which provided the seed capital for the new fund, is the investment manager and principal distributor of the new fund. It also entered into a sub-management agreement with Amundi Singapore Ltd., a specialist in global asset management.

This is the ninth fund rolled out by Pami, whose P20-billion assets under management are equivalent to about a fourth of the local mutual fund industry.