Sun Life Asset Management in the Philippines has launched a feeder fund that provides domestic investors exposure to global equities.
The Sun Life Prosperity World Equity Index Feeder Fund was made available to the public last month, according to a Manila-based spokeswoman at Sun Life AM.
The target fund of Sun Life AM’s new product is SSGA’s SPDR MSCI ACWI Ucits ETF, according to the fund’s factsheet.
With the launch of the new fund, Sun Life AM, which manages around PHP 94.6bn ($1.93bn) in assets (excluding insurance assets), now offers 16 mutual fund products in the Philippines, according to the spokeswoman.
The product is also the firm’s first feeder fund in the country, she added.
Mutual fund companies operating in the country were only allowed to sell feeder funds in December 2017, while banks or their trust entities were able to sell feeder fund products in 2013.
In the Philippines, mutual fund products are regulated by different regulators, which results in different terminology.
Banks and their trust departments and stand-alone trusts manage unit investment trust funds (UITFs) and are regulated by the central bank, the Bangko Sentral ng Pilipinas (BSP), while investment companies manage mutual funds and are regulated by the Securities and Exchange Commission (SEC).
Sun Life AM’s move to launch a global equity fund comes at a time when Philippine equities have continued to underperform the rest of the world.
Since the global market sell-off in March, the Philippine stock market continues to be in negative territory, with the Philippine Stock Exchange index returning -21.6% on a year-to-date basis, according to FE Fundinfo. The MSCI All Country World Index, on the other hand, has returned 1.25%.
Growth of the Philippine peso share class
Sun Life AM already has another global equities fund, the Sun Life Prosperity World Voyager Fund, which is an actively managed fund-of-funds product that was launched in 2016, according to the spokeswoman.
However, investors can only make US dollar investments in the FOF, while the new feeder fund accepts investments in the local currency.
“Many of our clients are eager to explore alternative investment outlets abroad, but are unable to since they naturally have Philippine pesos as their currency. This is the gap that [the new feeder fund] hopes to fill,” the spokeswoman said.
Other firms operating in the Philippines also saw the need to launch feeder fund products denominated in Philippine pesos.
For example, BPI Asset Management and Trust, a subsidiary of the Bank of the Philippine Islands, launched in December a Philippine peso share class of the BPI Invest US Equity Index Feeder Fund. The strategy was first launched in 2014, but only the US dollar share class was available.
At the time, BPI AM said that having a peso share class for feeder funds makes it easier for Philippine investors to invest, especially since not all domestic investors hold US dollar accounts.
Between 2018 and 2019, Manulife Asset Management and Trust also launched five peso-denominated feeder funds in the country, right after the firm was established in 2017, according to data from the Trust Officers Association of the Philippines (TOAP).
During the same period, ATRAM Trust launched five more feeder funds in the local currency, which include the country’s first technology-focused feeder fund.The ATRAM Global Technology Feeder Fund, which was launched in 2018, invests in Fidelity’s Global Technology Fund.