BPI launches index to guide institutional, retail investors

The Bank of the Philippine Islands (BPI) has launched an index series to guide institutional and retail clients who want to invest in Philippine securities.

BPI launched the BPI Index series following HSBC’s decision pull out the HSBC Asian Local Bond Index by the end of this month.

“HSBC pulled back and we decided to take the opportunity to provide this service to institutional clients and retail clients,” Simon Paterno, BPI Executive Vice President and Head of Financial Products and Services Group, told the Inquirer.

The BPI Index series covers six government bond indices, a corporate bond index and a total return index.

The six government bond indices are BPI Philippine Government Bond Index, BPI Philippine Government Bond 1-3 Year Index, BPI Philippine Government Bond Index 1-5 Year Index, BPI Philippine Government Bond 5+ Year Index, BPI Philippine Government Liquid Bond Index, BPI Philippine Government Money Market Index.

The BPI Philippine Corporate Bond Index is the first peso-denominated corporate bond index and makes available pricing of debt of the country’s biggest corporations.

“This becomes relevant in today’s low interest rate environment which resulted in increasing demand by investors for higher-yielding instruments, such as corporate bonds to improve their investment returns,” he added.

The 164-year-old bank also offered an alternative to measuring equity returns through the total return index, which takes dividends into account.

“This is in contrast with the Philippine Stock Exchange Index (PSEi), which of course exists, but does not include dividends,” he said, but clarified that the BPI Index was launched to complement the PSEi.

“With this launch,  BPI becomes the first Philippine financial institution to be offering a broader array of financial market indicators putting us at par with global index providers. Most importantly, this initiative shows our commitment to continue providing  a wide array of financial solutions that empower stakeholders,” Paterno said during the launch of BPI Index Monday. “We strongly believe that investment managers will find these indices suitable and convenient as benchmarks for assessing the performance of individual investment portfolios under their management.”

The six government bond indices are intended to reflect the performance of Philippine government, fixed-rate straight bonds denominated in Philippine pesos.

Weighted by the market capitalization of each security, eligible securities are filtered based on size and maturity.

BPI is the index sponsor while wholly owned subsidiary BPI Investment Management Inc. is the index calculation agent.

The BPI Index seeks to provide benchmarks for portfolio managers here and abroad who want to invest in the Philippines and participate in its growth story, said Paterno.

“The conditions are timely for the crafting of BPI Index to further spur the growth of the domestic market and meet the needs of a larger pool of investors,” he added.

Daily index values will be computed at the end of every business day and will be posted in the BPI website (www.bpiindex.com).