State of the UITF Industry
TOAP Summit
October 4, 2012
Maria Theresa M. Javier
SVP & Head, BPI Asset Management
Total Trust AUM at PhP3Trillion (USD72Bn)
7Yr CAGR of 20%
In PhP Bn
3,500
3,034
3,000
2,818
2,500
2005
2006
2007
2008
2009
2010
2011
2012
2,194
2,000
1,765
1,500
1,000
Year
892
861
2005
2006
1,153
1,222
2007
2008
500
0
2009
2010
2011
2012
YOY
Growth
14%
-4%
34%
6%
44%
24%
28%
8%
UITF Industry at PhP167Bn (USD4Bn)
3Yr CAGR of 17% post-crisis
In PhP Bn
Annual decline of 25.5%
from 2005-2008
Annual growth of 17%
from 2009-2011
Year
YOY
Growth
2005
-5%
2006
-39%
2007
-13%
2008
-39%
2009
22%
2010
16%
2011
14%
2012
15%
Percentage of UITFs to Total Trust
In PhP Bn
3500
3,034
3000
2,818
2500
2,194
2000
1,765
1500
1,153
1000
500
892
279
1,222
861
170
149
90
111
128
146
168
0
2005
2006
2007
2008
2009
2010
2011
2012
Year
2005
2006
2007
2008
2009
2010
2011
2012
UITF %
31%
20%
13%
7%
6%
6%
5%
6%
Total CIS in the Philippines is PhP292Bn
(USD7Bn)
in PhP Bn
400
356
350
300
292
279
246
250
200
224
179
170
77
76
86
168
150
149
150
100
249
235
111
90
60
128
96
146
104
125
69
50
0
2005
2006
2007
UITFs
2008
2009
Mutual Funds
2010
2011
Total CIS
2012
Year
Total
CIS
Grow th
2005
356
NA
2006
246
-31%
2007
235
-5%
2008
150
-36%
2009
179
19%
2010
224
25%
2011
249
11%
2012
292
17%
More than 80 UITFs offered by
22 Trust Institutions
USD-denominated
33%
PhP-denominated
67%
Money Market
24%
Equity/Balanced
23%
Bond
53%
Regulatory Framework
Year
Regulation
2004
BSP Circ 447
2007
BSP Circ 577
2008
BSP Circulars
593 and 594
2009
BSP Circulars
675 and 676
2012
BSP Circ 767
Highlights
Basic provisions regarding the creation, administration and
investment/s of UIT Funds.
Exemption from the Exposure Limit to a Single Person or
Entity for Index UITFs
Highlights the Client Suitability Assessment and Risk
Disclosure requirements
Regulations governing the derivatives activities of banks
Allowed loans arising from repo contracts as investment
outlets and clarified definition of “Tradable”
Cross-Currency Investments for Peso Unit Investment Trust
Funds
Rules governing creation of Fund of Funds and Feeder Funds
Returns on different asset classes
HSBC MM
Phils
3-Mo T-Bill
HSBC ALBI
Phils.
JACI
Phils.
PSEi
2006
6%
N/A*
22%
16%
42%
2007
4%
5%
6%
8%
21%
2008
5%
4%
2%
-5%
-48%
2009
4%
4%
8%
24%
63%
2010
3%
4%
12%
14%
38%
2011
2%
2%
13%
10%
4%
5-Yr CAGR
4%
4%**
8%
10%
7%
YTD 2012
2%
2%
6%
13%
21%
*HSBC MM Phils was launched on November 1, 2006.
**4-Yr CAGR
How much room to grow
Philippines: Total CIS (USD6Bn) vs.
Deposits (USD113Bn)
In USD Bn
120.00
113
107
113
Year
98
100.00
88
80.00
76
73
60.00
40.00
20.00
5.86
5.86
5.60
3.57
4.26
5.33
5.93
0.00
2006
2007
2008
Sources: www.bsp.gov.ph and PIFA data
2009
2010
2011
2012
% to
Deposits
2006
2007
2008
2009
2010
2011
8%
8%
6%
4%
4%
5%
2012
5%
Singapore: Total CIS (USD26Bn)
vs. Deposits (USD393Bn)
In USD Bn
450.00
392.68
400.00
Year
352.03
350.00
317.89
282.11
300.00
255.28
250.00
% to
Deposits
221.14
2006
11%
2007
12%
2008
7%
2009
8%
2010
8%
2011
7%
200.00
150.00
100.00
50.00
24.39
31.71
18.70
25.20
26.83
26.02
0.00
2006
2007
Source: www.mas.gov.sg
2008
2009
2010
2011
Malaysia: Total CIS (USD93Bn)
vs. Deposits (USD446Bn)
In USD Bn
500.00
450.00
425.90
400.00
Year
372.79
348.20
350.00
300.00
445.90
318.69
% to
Deposits
2006
19%
2007
14%
2008
18%
2009
20%
2010
19%
2011
21%
284.59
250.00
200.00
150.00
100.00
55.41
50.00
43.93
62.62
74.10
81.64
92.79
0.00
2007
Source: www.bnm.gov.my
2008
2009
2010
2011
2012
HongKong: Total CIS (USD1Trillion) vs.
Deposits (USD979Bn)
In USD Bn
1,400.00
1,200.00
1,084.00
1,000.00
800.00
Year
1,191.10
757.16
781.55
926.84
823.35
% to
Deposits
1,017.68
979.48
885.42
630.71
2007
143%
2008
81%
2009
113%
2010
135%
2011
104%
600.00
400.00
200.00
0.00
2007
Source: www.sfc.hk
2008
2009
2010
2011
US: Total funds (USD12.6Trillion) vs.
Deposits (USD10Trillion)
In USD Tr
16.00
13.38
14.00
12.00
12.09
11.88
10.56
10.00
8.00
12.82
7.83
8.42
9.04
9.23
9.42
Year
% to
Deposits
2006
152%
2007
159%
2008
117%
2009
131%
2010
136%
2011
124%
12.60
10.19
6.00
4.00
2.00
0.00
2006
2007
Source: www.ici.org, www.fdic.gov
2008
2009
2010
2011
Philippine Capital Markets
Role of UITFs
in Capital Market Development
• Mobilizes domestic savings more efficiently
• Addresses investors needs more effectively
• Enhances the liquidity of the domestic financial
markets
• Offers more viable financial instruments to diversify
the financial system
Government Innovations in Peso Bond Markets
•
•
•
Debt Consolidation Program – The Philippines’ Bureau of Treasury has conducted 6
bond exchanges since 2006 effectively extending its maturity profile and reducing the
Republic’s overall funding cost
Issue Date
Tenor
Size in billions
March 2006
August 2006
3, 5, 7- year
10 - year
PHP 122
PHP 54
February 2007
3 and 5- year
PHP 97.5
January 2009
5 and 7 - year
PHP 144.5
December 2010
10 and 25 - year
PHP 199.5
July 2011
10.5 and 20 - year
PHP 323.5
Retail Treasury Bonds - part of the government’s savings mobilization program designed to
make government securities available to retail investors and at the same time create savings
consciousness among Filipinos. With RTBs, investors can buy the debt paper for a minimum
amount of P5,000.
Global Peso Note – Issuance of Peso denominated bonds settled in US Dollars which have
allowed the government to expand its investor base
Issue Date
September 2010
January 2011
Tenor
10- year
25- year
Size in billions (PHP)
PHP 44.1 Bn
PHP 54.8 Bn
Government Securities (PHP denominated)
WtAvg Years to Maturity
WtAvg Fixed Cpn
GS Turnover Ratio
GS Total Trade Volume (in Blns)
GS Amount Outstanding (in Blns)
* August 2012
Sep-12
10.02
7.27
2007
0.70
1,564
2,244
Dec-11
9.19
7.60
2008
0.78
1,936
2,471
Dec-10
7.42
7.85
2009
1.02
2,582
2,540
Dec-09
5.08
8.26
2010
1.91
5
2,821
2011 YTD2012*
1.82
1.03
4,163
2,959
2,284
2,876
Government Securities (USD denominated)
WtAvg Years to Maturity
WtAvg Fixed Cpn
Sep-12
12.66
7.02
Dec-11
12.74
7.13
Dec-10
12
7.25
Dec-09
10.6
8.43
Corporate Bonds
More firms are tapping the debt capital market for funding, taking advantage of the low
interest rate environment.
Fixed Income Exchange
Launch of Philippine Dealing and Exchange Corp (PDEx)
in 2005
– As a provider of market infrastructure
• Price discovery
• Transparency
• Straight thru processing of trades from trading
to settlement
– As a self regulatory organization:
• Formulates the requisite market rules
• Enforces compliance in the inter-dealer market
PSEi: 7-Yr CAGR of 12.8%
Market Capitalization and Net Foreign Inflow
Market Cap
Index Count
2005
6,204,662.78
257
2006
8,137,953.63|
259
2007
8,067,217.60|
262
2008
2,408,689.28
268
2009
3,617,742.36|
261
2010
8,295,094.97
272
2011
8,536,988.31
10,264,313.60
268
269
Sept 2012
Philippines in a sweet spot



Moderately strong economic growth due to resilient
domestic consumption

Strong dollar remittances

Booming BPO sector
Prudent fiscal management and good governance
Low interest rates and strong stock market performance
encourage shift to investments and capital markets
• Rise of Asian wealth creation and growth of high
networth individuals
Challenges and Initiatives
Challenges



Lack of published and consistent data on industry statistics as basis
for market analytics
Need to revive investor confidence and interest
o
More investment options
o
Enhanced investor education
o
Increased attractiveness to foreign investors
Need for continuous competency-building of UITF certified
marketers
Initiatives






Promote growth through cooperation and transparency of industry
information
Continuous pipeline of product innovation
o Closed end funds
o Capital-protected funds
o Income paying funds
Enhance retail investors' access through open architecture
More friendly tax environment
Financial education for all by leveraging on the use of technology
and new media to widen reach
Additional learning including preparedness for financial planning
and more sophisticated fund products
In Conclusion
 Market environment is very conducive to growth
 Cannot afford to be pigeonholed in old business practices
 Think long-term health and soundness without sacrificing
consumer protection