MANILA — The Bangko Sentral ng Pilipinas (BSP) has decided to allow conservative investors of Unit Investment Trust Fund (UITF) to place their funds in government-backed floating rate notes.
BSP Deputy Governor Chuchi Fonacier said this rule was approved by the policy-making Monetary Board (MB) during their meeting last October 18.
She said this policy move “will encourage UITF” investors, citing feedback from industry players that interest for government-issued securities is really huge.
Before the MB decision, conservative clients are only allowed to invest their funds in bank deposits, she said.
“This is a good news for the market,” she said.
BSP defines conservative clients as those who want an investment strategy “where the primary goal is to prevent the loss of principal at all times”, among others.
Under the General Banking Law, UITF was created to “establish and manage common trust funds, subject to such rules and regulations as may be described by the Monetary Board.”
Previously, there was a Common Trust Fund (CTF) but this was phased out on September 30, 2006.
The change was made to ensure that pooled funds are managed by trust entities using international best practices as well as to ensure differentiation from bank deposits, among others.
Aside from bank deposits, UITFs can be invested in financial instruments like government securities, tradable securities issued by a foreign government, securities listed with the stock exchange, marketable instruments trade in an organized exchange, loans traded in an organized market, and other tradable investment allowed by the central bank. (Joann Villanueva/PNA)
