THE Philippines has become an attractive location for assets under management (AUM) and expects to see further growth in such assets in the country, worth close to P3 trillion as reported by trust institutions to the central bank as of end-March, or even P4 trillion if those under other asset management companies are included.
The total amount of AUM reported to the Bangko Sentral ng Pilipinas (BSP) as of end-March stood at P2.7 trillion. However, BSP governor Amando Tetangco Jr. said the estimate made by the Fund Managers Association of the Philippines (FMAP) showed that the total AUM in the country approached P4 trillion, covering 174 peso-denominated fixed income and equity funds and 52 foreign-denominated funds.
“The BSP expects these numbers would continue to grow moving forward,” he said.
“The Philippines’ strong economic growth nestled by a stable inflation environment, robust external liquidity position, and a sound banking system, could only further boost the market’s confidence in our domestic financial markets,” he added.
Global investors, he noted, have now become more discriminating, and their search for yield during the current extended period of low global interest rates is balanced by the need for stability of returns.
The local investor, on the other hand, he added, is also becoming more selective and growing in sophistication, gaining more willingness to try newer products to meet specific needs.
As the AUM sector thus becomes more attractive to investors, Tetangco reminded fund managers of their great responsibility in managing the hard-earned funds of others.
The fund managers, he said, should observe financial consumer financial protection.
“Several studies have shown that the disruptions of the Global Financial Crisis were particularly costly because investors found themselves unprepared for the market reversal.
In many cases, these investors were enticed by the returns promised by agents without necessarily understanding the risks that they were taking,” he said.
“Because of the agency nature of your business, the industry cannot thrive without considering the specific needs of each client,” he added.
Tetangco said clients must also be empowered to better define their requirements and understand how their financial resources could be optimized to meet these needs.
Such a symbiotic relationship between fund managers and clients therefore necessitates the adherence to the standards on financial literacy as a pro-active initiative and consumer redress as a remedial measure when warranted, he concluded.