MANILA, Philippines—Filipinos will soon be able to have investments in banks’ trust departments, previously available only to high net worth individuals, after the Bangko Sentral ng Pilipinas (BSP) lowered the minimum amount required to participate in so-called investment management activities.
In a statement, BSP Governor Benjamin Diokno said the new policy approved recently by the Monetary Board will allow bank clients to access a wider array of investments for as low as P100,000 from a previous minimum amount of P1 million.
The amendment aims to expand investment opportunities for the public by reaching markets that may not have been able to open investment accounts due to the high entry requirement.
“Through our forthcoming issuance, we hope that more savers will transition into investors,” he said. “This is in line with the goal to make financial services more accessible to the public.”
An investment management activity refers to any activity wherein a trust entity or investment manager binds itself to manage investible funds or any investment portfolio on behalf of clients with the primary objective of yielding financial returns.
As opposed to mutual funds or unit investment trust funds — both of which already accept investments of as low as P5,000, in some cases — investment management accounts allow clients to customize their individual portfolios according to their risk appetites and return on investment targets.
The central bank explained that the new policy will also reduce the required investment per management account in a commingled fund from P1 million to P100,000. Commingling is the act of combining funds from multiple IMAs for the sole purpose of investing in qualified assets.
This is aimed at increasing the participation of retail investors in the securities markets through investment management accounts.
Further, commingled funds can now be invested in a wider range of financial assets, which included exchange-traded equities and fixed income securities and commercial papers registered with the Securities and Exchange Commission and securities issued by Philippine banks. Likewise, corporate accounts can now participate in commingled funds.
Trust entities are expected to have the operational capability to manage accounts participating in commingled funds and are required to fully disclose to clients the risks associated with the same. This included the risk that assets in a commingled fund may not, at times, be easily divested at favorable market prices.
The amendments are expected to support the growth of the trust industry while underscoring the importance of consumer protection.
“As always, we aim to strike a balance between liberalization and prudence. There are more changes in trust regulations in the pipeline and we hope that the industry will welcome these changes as well,” Diokno said.