“Philippine investors want to put money offshore and the majority of flows this year are into our global feeder funds,” Caw told FSA.
At the end of October, the firm’s Asia Equity Opportunity Feeder Fund had the highest inflows, about $52m year-to-date, he said.
The firm’s peso-denominated offshore feeder funds were the top three in terms of inflows “and we expect to see the same trend for next year”, he said.
Atram Group is now an independent asset management firm after key shareholders bought out the stake of Maybank in 2017, Caw said.
The group has two entities, Atram Inc, a mutual funds business (locally-managed funds) and Atram Trust, which works with feeder funds.
The set-up is due to the Philippines having two regulators. Unit trusts (UITFs), which include feeder funds, are under the central bank and mutual funds are regulated by the Securities and Exchange Commission.
For several years authorities have talked about merging the two regulators, but there has been no progress toward that aim, Caw said.
Offshore interest
The firm’s investor base is mainly on the institutional side, such as corporate accounts, with the remainder of assets from HNWI.
Atram Trust has feeder fund arrangements with Blackrock and Franklin Templeton. Local investors can invest in global funds that are locally-wrapped and some are denominated in Philippine pesos.
“Feeder funds are typically US dollar-denominated but we created peso denominated funds so local investors can buy Apple, Amazon and Google in their own currency.”
Feeder funds offered by Atram include equity funds focused on technology, emerging markets, Europe, the US, Asia and global markets, and in bonds emerging markets and total return.
Caw said Philippine asset managers are looking for more feeder fund arrangements.
”These will create more options for Filipinos. By launching more global feeder funds, asset management firms can address the growing demand for investment options in the country.
“Although private wealth is growing and there is a lot of money in the Philippines most people are still generically invested in money market funds or single bonds – not even bond funds.”
He believes there will be an increasing shift into offshore assets as more global strategies are made available. “With rising inflation, money market funds will not work out well. With rising interest rates we have to have the right products.”
In 2019, the firm is aiming to launch eight funds, which are awaiting regulatory approval. The strategies include global multi-asset, fixed income and a financial sector theme.
Foreign bank interest
On the wealth management side, foreign banks have been entering the Philippines.
Among them, Lombard Odier is working with Union Bank to develop funds for private clients and Credit Suisse earlier this year set up a representative office in Manila.
“Foreign banks are looking into the potential for wealth management in the Philippines,” Caw said.
The Philippines has a qualified buyer program, which means a qualified investor can invest directly in wealth management products provided certain requirements related to AUM, fees and disclosures are met.
“Global private banks are looking for that business,” he said.
