THE Bangko Sentral ng Pilipinas (BSP) has released new regulations making more transparent the information investors need when participating in so-called unit investment trust funds (UITFs) as these become more sophisticated.
The new regulations help promote operational efficiency while enhancing consumer protection in the investment vehicle.
Circular 852 and 853 the BSP issued on October 21 introduced amendments to the bank’s handling of UITFs.
UITFs are collective investment schemes that pool the resources of many investors and managed by professionals that access superior investment opportunities normally not available to individual retail investors.
UITFs are mandated to keep key information and investment disclosure statement (KIIDS) that contain the key features and the prospective and outstanding investments of a UITF.
Information should include the general investment policy and applicable risk profile, the pricing, cut-off time for participation and redemption, penalties and any other special feature, all charges and the availability of plan rules upon client’s request.
The regular computation and daily availability of the so-called net asset value per unit (Navpu) is also mandated by the circular.
“The recent amendments to UITF regulations, particularly on the inclusion of the key information and investment disclosure statement as part of disclosure documents and the requirement to make the available daily and historically, are to improve consumer protection and align these with global best practices,” BSP Governor Amando M. Tetangco Jr. told reporters.
“The circular specifies the content and format of the KIIDS, a one-sheet document that is intended to help UITF investors better understand and compare across UITF offerings,” he said.
The central bank also now allows the offering of a multiclass UITF under Circular 853.
The central bank defined a multiclass UITF as a “structure [that] has more than one class of units in the fund and is invested in the same pool of securities and the same portfolio, investment objectives and policies.”
Tetangco said that with the new circular, trust managers may now create a pool of funds with different levels of holding periods and trust fees, among others.
“There is a second circular on allowing the offering of multiclass UITFs. Before this, UITF regulations only allow for a single fee structure, target participants, minimum participation and holding period for each UITF. Under this new circular, trust specialists could create multiclass UITFs, which would have several classes of units which may be differentiated based on level of trust fees, holding period, etc.,” Tetangco said.
“The creation of the multiclass UITF is expected to promote operational efficiency and improve economies of scale for collective investments,” he added.
Both circulars will take effect 15 days following its publication in the government’s news portal or in any newspaper of general circulation in the country.