The Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) recently amended its regulations over unit investment trust funds (UITF) in line with the thrust of regulatory reforms that promote a more efficient and transparent financial market environment, the central bank said.
In a statement over the weekend, the central bank said the MB has approved the new rules on the creation of a multi-class UITF, a type of fund with more than one class of units, “which can be differentiated based on the level of trustee fees and expenses, minimum participation, minimum holding period, and target participants.”
BSP Governor Amando Tetangco Jr. explained that the existing 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 multi-class UITFs, which would have several classes of units which may be differentiated based on level of trust fees, holding period, etc,” he said.
Tetangco said the creation of the multi-class UITF is expected to promote operational efficiency and improve economies of scale for collective investments.
On the other hand, the MB also strengthened the disclosure requirement for UITFs by prescribing the use of the Key Information and Investment Disclosure Statement (KIIDS) and online posting of UIKTF information via a website.
The BSP said KIIDs underscore key product features and information in a clear and concise manner, which is expected to facilitate understanding and comparison among UITFs offered by trust entities.
“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 NAVPU [net asset value per unit]available daily and historically, are to improve consumer protection and align these with global best practices,” Tetangco said.
In addition, the BSP clarified that exchange-traded funds, as well as other collective investment schemes regulated by other regulatory authorities acceptable to the BSP besides those who are members of the International Organization of Securities Commission, may be allowable target funds of fund-of-funds and feeder fund UITFs.