China Bank posts 5th largest trust assets
At the end of 2015, China Banking Corp. emerged as the fifth leading domestic bank in terms of trust assets, including unit investment trust fund (UITFs), amounting to P82.3 billion, up 24.7 percent from P66 billion in 2014.
A UITF is a pool of investments made by individuals and institutions with a trust department of a bank. Each fund is, in turn, invested in various instruments like bond or fixed income funds, equity or securities fund, and money market fund.
China Bank first vice president and Trust and Investments head Patrick D. Cheng said 45 percent, or P36 billion, are UITFs.
The remaining 55 percent are classified as custodial or trusteeship in the form of cash, savings bonds, stocks, bonds, mutual funds, real estate and other property.
The trust group manages nine UITFs with the money market fund amounting to P30 billion.
Money market funds are short term in nature, but offer better returns than time deposit instruments. Often referred to safe haven, investments parked in money market funds when investors are uncertain of the bond or equity funds.
Due to the low interest rate environment, the bond market remains unattractive while the equity market is volatile in the short term.
Ch eng said large investors prefer to wait for the earnings results of the first quarter, in the short term.
“In the longer term, investors want to know the agenda of the new government,” he said, adding that it will be critical that the new administration would continue to sustain approvals of pipeline projects especially infrastructure related.
Meanwhile, Cheng said they would be relying more on expanding the size of its assets under management (AUMs).
“Our plan (for 2016) is to grow AUMs of existing funds, rather than introducing new funds.”
The trust operations of China Bank handle 11,000 investment and savings accounts with more than 70- percent classified as retail and commercial clients.
Total AUM of UITFs managed by banks last year reached P663.4 billion with 83 percent accounted for by BDO Unibank Inc. ( BDO), the Bank of the Philippine Islands ( BPI) and the Metropolitan Bank & Trust Co. (Metrobank).