BSP: “The continued surge in UITFs in terms of both volume and number of participants has propelled the growth of the trust industry.”
BSP — The Bangko Sentral ng Pilipinas is set to establish a common framework across the trust industry on benchmark selection as AUM (assets under management) nears the PHP 5-trillion level.
According to BSP Governor Benjamin Diokno, the AUM of the trust industry jumped by 25% to reach almost PHP 5 trillion as of end-September 2021 compared to the level prior to the COVID-19 pandemic.
Diokno told FMAP (Fund Managers Association of the Philippines) members during their recent general membership meeting that UITF (unit investment trust fund) assets grew by 22% to PHP 1.3 trillion as of end-September 2021.
“The continued surge in UITFs in terms of both volume and number of participants has propelled the growth of the trust industry,” Diokno said. “The accessibility of UITFs via various digital platforms significantly contributed to the growth.”
As such, the BSP chief said that the regulator continues to enhance the regulatory framework and to push policy reforms under the trust business model initiative, digitalization, and sustainable finance.
UITFs, according to a report on Philstar, are open-ended trust funds in the form of balanced funds, bond funds, money market funds, and equity funds, among others that could be in peso or other acceptable currency.
The BSP chief said that the regulator is coming up with an issuance under the trust business model initiative involving guidelines on performance measurement.
“This shall set out the BSP’s expectations on the selection of benchmarks for UITFs, based on the principles of fair representation and full disclosure,” Diokno said.
According to Diokno, the issuance aims to establish a common framework across the trust industry on benchmark selection and to ensure that clients are provided with the necessary information in order for them to adequately assess fund performance.
The central bank also urged FMAP to accelerate their own digital transformation journeys as the Philippines actively moves toward a more digital society. Diokno also said that digitalization can reduce distribution costs and can make financial transactions faster and more convenient.
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Financial institutions, according to the BSP chief, can also employ digital means in order to serve several clients simultaneously, thus expanding reach.
According to the central bank, it has issued the Sustainable Finance Framework advocating for the integration of sustainability or ESG (environmental, social, and governance) principles into the operations of supervised institutions.
The BSP chief said that while the formal framework is specifically geared toward banks, they encourage fund managers to consider social and environmental risks in their operations.
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