July 17, 2013

Mutual funds allowed higher investment cap

Investment companies, particularly mutual fund firms, are now allowed to allocate more resources in a single business entity.

In a memorandum, the Securities and Exchange Commission (SEC) said “the maximum investment of an investment company in any single enterprise shall not exceed an amount equivalent to 15% of the investment company’s net asset value except obligations of the Philippine government and its instrumentalities.

” Prior to the amendment, maximum single entity investment of a mutual fund was pegged at 10% of the investment firm’s net asset value. SEC retained the rules barring mutual funds from owning more than 10% of the outstanding shares of an investee company.

“For liquidity purposes, unless otherwise prescribed by the SEC, at least  5% of an openended company fund shall be invested in liquid or semi-liquid assets,” said SEC, which relaxed the rules from the previous 10% requirement.

The country’s mutual fund industry has assets under management (AUM) worth a record P146.2  B as of end-2012, surging 41.1% from P103.6  B in end-2011, data from the Philippine Investment Funds Association Inc. (PIFA) showed. - WealthSec