Asset management plays a crucial role in the financial world, acting as a strategy to grow wealth and secure financial stability for individuals and organizations. It also involves the professional management of various assets — such as investments, stocks, bonds, and real estate — on behalf of clients.
For a start-up investor, learning all these from scratch can be a little challenging. That’s why in this article, we’ll walk you through how asset management works in the Philippines, helping you navigate the complexities of the market.
In the Philippines, asset management operates on a framework that integrates global best practices with local regulatory standards, providing investors access to a diverse range of investment opportunities.
The industry is composed of various financial institutions that specialize in managing investments on behalf of their clients. These institutions serve as intermediaries, offering tailored services to meet the unique needs of different investors, including high-net-worth individuals and institutional entities.
Whether you aim to pursue higher-risk investments for potentially greater returns or adopt a more conservative strategy, asset management firms play a pivotal role in helping you diversify your portfolio and achieve your financial objectives. Below is an overview of the structure that supports this system:
The investment options available through asset management services in the Philippines are varied and designed to cater to a wide range of risk appetites, investment horizons, and financial objectives.
Whether you're a conservative investor seeking stability or an aggressive investor aiming for higher returns, there's an option for everyone. Here’s a closer look at some of the most common types of investment vehicles:
UITFs are pooled investment vehicles offered by banks and trust companies, allowing individual investors to invest collectively in a diversified portfolio of financial assets such as equities (stocks), bonds, and money market instruments.
These funds are managed by professional fund managers, who make decisions about which assets to buy or sell based on the fund's objectives and market conditions.
UITFs also offer investors the opportunity to access a diversified portfolio with relatively low capital requirements, making them suitable for investors looking to spread their risk without having to manage individual investments.
Similar to UITFs, mutual funds are also collective investment schemes that pool the capital of multiple investors to invest in a diversified portfolio. However, there are key differences between the two.
Mutual funds are typically managed by a company that holds the fund, which can be a private or publicly listed company, rather than a bank or trust company. It can also invest in a variety of assets, including stocks, bonds, and real estate.
Aside from that, it also provides liquidity, as investors can redeem their shares at the current net asset value (NAV) of the fund, making them suitable for both short- and long-term investments.
VULPs offer a unique combination of insurance coverage and investment opportunities, making them an attractive option for individuals seeking both financial protection and potential returns.
These policies allow policyholders to allocate their premiums toward investments in a variety of securities, including stocks, bonds, and other instruments.
The value of the policy is also tied to the performance of the underlying investments, which means that the returns can fluctuate depending on market conditions.
The Philippine asset management industry operates within a robust regulatory framework designed to protect investors and ensure the stability of the financial market. Two key regulatory bodies oversee the activities of asset management firms and the financial markets:
The BSP plays a vital role in regulating the trust operations of banks and other financial institutions involved in asset management. Its main objective is to maintain price stability and promote a sound and efficient financial system.
Aside from that, they also oversee the licensing and supervision of trust companies that offer investment products such as UITFs.
SEC is the regulatory authority for the securities market in the Philippines. It is responsible for enforcing the regulations governing mutual funds, the disclosure of investment-related information, and the protection of investor rights.
They also monitor the operations of mutual fund companies and ensure that they comply with the necessary rules and regulations set forth by the law.
Understanding how asset management works in the Philippines is essential for any investor looking to grow their wealth while minimizing risks. With various investment options like UITFs, Mutual Funds, and VULPs, there are plenty of opportunities to diversify your portfolio and meet your financial goals.
At Rocket Equities, we understand the complexities of asset management and are here to guide you through the various options available to maximize your investment potential. If you're ready to explore asset management solutions that align with your financial goals, contact us today for expert advice and tailored investment strategies.
