The SB US Equity Index Feeder Fund is the domestic wrapper for the Vanguard Total Stock Market ETF, while the SB Global Equity Index Feeder Fund’s target fund is the Vanguard Total World Stock ETF, according to the bank’s website.
Both funds were launched last month, according to Rafael Paolo Sanchez, head of business development for the bank’s trust and asset management group.
“We chose Vanguard because aside from being one of the biggest fund providers, they also offer customers [one of] the lowest fees in the industry. These localised feeder funds, if you do a TER [total expense ratio] comparison, also have the lowest [fees] in the local industry,” he told FSA.
The new funds follow the bank’s launch of its first feeder fund in January, which is an Asia-Pacific equity fund that invests in Mitsubishi UFJ Asset Management’s Asia Pacific ex-Japan Equity Stable Growth Fund.
Since its launch, assets of the Asia-Pacific fund have reached $3m as of the end of June, according to the fund factsheet.
All three funds are offered to retail, institutional and high net worth individuals, according to Sanchez.
Surge in feeder funds
This year, 13 feeder funds have been launched by banks and trust companies in the Philippines, compared to just five last year, according to data from the Trust Officers Association of the Philippines (TOAP).
In total, there are 39 feeder funds, 29 of which are equity funds, out of the roughly 200 unit investment trust funds (UITFs) in the country.
Assets in dollar-denominated feeder funds have increased 20% to $152m in April from $126m at the beginning of January 2017, TOAP data shows.
There are only four Philippine peso-denominated feeder funds, which saw their assets surge to PHP 7.3bn ($140m) from PHP 1.59bn during the same period. However, those figures are skewed as two of those feeder funds, which are managed by ATR Asset Management, account for 90% of the peso-denominated feeder funds and collectively only have 38 account holders, according to TOAP data.
Feeder funds are relatively new in the country. Banks and trust corporations were only allowed to launch the products in 2013.
In December, Philippine investment companies were also given permission to sell feeder funds, a move that is likely to increase feeder fund assets. The regulatory move is a huge step in developing the country’s fund industry, as local players have been anticipating the change since 2016.
The Philippines’ mutual fund industry is complicated because it has two financial regulators.
Collective investment schemes (mutual funds) managed by banks and trust corporations are called UITFs, which are regulated by the country’s central bank, the Bangko Sentral ng Pilipinas.
Mutual funds that are managed by investment companies are regulated by the Securities and Exchange Commission.
