BPI bets on real estate as inflation hedge with P1-T mutual fund

The Ayala Group’s Bank of the Philippine Islands (BPI) is making a wager of as much as P1 trillion on domestic and global real estate with the launch of a pioneering mutual fund next month.

BPI, through wholly owned subsidiary BPI Investment Management, announced on Wednesday plans to roll out the country’s first ever property-themed mutual fund called ALFM Real Estate Income Fund or ALFM REIF.

The lender said the peso-denominated mutual fund would be launched by the middle of August. It would be offering to the public up to 100 billion units, with an initial net asset value of P10 each. The minimum investment is P5,000.

‘Aggressive investors’

ALFM REIF is suited for “aggressive investors with an investment horizon of more than five years,” according to BPI.

It said ALFM REIF would mainly buy real estate investment trusts (REITs) issued in the Philippines and overseas apart from securities with the same objectives.

“The fund enables investors to invest in the growing real estate sector and earn dividend income, on top of capital appreciation,” BPI said.

The bank is betting on the resiliency of the property sector, which it sees as a hedge against surging consumer costs. This comes at a time when concerns over slowing growth have triggered global recession fears, pulling down prices of stocks and other assets.

“Diversifying into real estate, both through REITs and real estate-linked securities, is a good hedge against inflation, especially with inflation driven by the current market conditions,” said BPI Investment Management president Martin Enrile.

Past roadblocks

The Philippine Stock Exchange (PSE) saw a wave of REIT listings in the past two years after the Duterte administration resolved taxation and public ownership roadblocks put up by the previous Aquino government.

Billionaire Manuel Villar Jr.’s VistaREIT Inc. was the latest REIT company to debut on the PSE last June 15. Ayala Land Inc.-backed AREIT Inc. was the pioneering REIT firm when it listed on Aug. 13, 2020.

The other PSE-listed REITs were Citicore Energy REIT Corp., DDMP REIT Inc., Filinvest REIT Corp., MREIT Inc. and RL Commercial REIT inc.