Manulife launches PH asset management arm

Manulife Asset Management and Trust Corp. CEO Aira Gaspar, Manulife Philippines CEO Ryan Charland and Manulife Asia head of wealth and asset management Michael Dommermuth at the launch of the Manulife Asset Management and Trust Corp. on Sept. 20, 2017

Global financial services provider Manulife Group has rolled out an asset management unit in the Philippines, riding on its international experience in wealth management to expand its 110-year-old local franchise beyond its traditional insurance business.

The group launched on Wednesday Manulife Asset Management and Trust Co., touted as the first trust corporation in the Philippines backed by a leading multinational financial services group. The new company, which will serve both retail and institutional clients, focuses on offering unit investment trust funds (UITFs.)

“We are investing very, very heavily within the ASEAN (Association of Southeast Asian Nations) region. We’re doing that because we’re throwing the ball to where we think the receiver will be rather than where they are today,” Michael Dommermuth, head of wealth and asset management at Manulife Asia, said in a press briefing on Wednesday.

Manulife believes that ASEAN will be one of the fastest growing regions of the world, eclipsing Japan and the European Union by year 2050 to be the world’s fourth largest economy. ASEAN countries like Vietnam, Indonesia and the Philippines will see a spectacular rise in terms of economic ranking, Dommermuth said.

Manulife’s foray into Asean asset management started 20 years ago and it has since then built businesses in Vietnam, Indonesia, Malaysia, Thailand and Singapore. Its foray into the Philippine asset management scene is thus the last piece needed to complete a portfolio on ASEAN’s six largest economies.

Asked why it had taken Manulife 20 years to enter the 100-million-people Philippine market, Dommermuth said: “Before, the regulations were really not accommodative to that which we wanted to accomplish. It’s only been recently that foreign firms have been allowed to establish trust companies such as what we have now established.”

Trust corporations are entities duly authorized by the Bangko Sentral ng Pilipinas to engage in funds management under either a trustor-trustee arrangement or an agency type of agreement. Unlike existing trust units of banks and non-bank financial institutions, these entities are organized as a corporation with its own capital and management structure.

Ryan Charland, president and chief executive officer of Manulife Philippines, said the group’s entry into this business was meant to complement its suite of offerings to include solutions which were free from insurance. This is seen necessary to broaden its reach to other clients, especially young people who are not yet ready to buy insurance products or even older people who had already preserved their wealth.

Asked why Manulife chose to focus on UITFs instead of mutual funds, Charland explained: “We do believe there are certain advantages with unit investment trusts, as an example, the (lower) charge structure for clients. We’re also able to offer fund of funds. We can offer feeder funds that come from outside the Philippines and we also believe that through this method, we’ll be able to license and get more of our financial investors to sell UITFs faster.”

Dommermuth, for his part, noted that the UITF industry in the Philippines was much bigger at $17 billion compared to the $5-billion mutual fund market.

Like mutual funds, UITFs are pooled from a number of investors and are professionally managed to mitigate risks and allow diversification. Unlike mutual funds which are separately incorporated, however, these instruments can be created as products of banks and trust corporations.

In the case of Manulife, the first three new UITFs are as follows:

– Manulife stable income fund: a bond fund that seeks to preserve capital and generate income by investing in fixed income securities with maximum remaining term to maturity of up to three years;
– Manulife income builder fund: a bond fund that seeks to achieve stable and long-term growth by investing in government securities and/or high quality corporate debt securities and other liquid fixed income instruments; and,
– Manulife equity wealth fund: an equity fund that seeks to achieve long-term capital appreciation by investing in stocks listed on the Philippines Stock Exchange, fixed income securities and other liquid fixed income instruments.

Aira Gaspar, president and chief executive officer at Manulife Asset Management and Trust Corp. added: “While the financial markets are likely to be moved by external developments, we believe that the Philippines’ strong economic growth accompanied by relatively low inflation expectations provides a favorable backdrop for the local bond and equity markets. Over the short-term, the passage of the tax reform package could provide the much-needed catalyst for the local stock market to continue its upward trend. The bond market on the other hand, is expected to gain support from well-anchored inflation expectations. Bonds remain an ideal investment option for a diversified portfolio.”