BPI Feeder Funds
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Not very long ago, Fund-of-Funds type of UITFs were introduced in the market, Now, we have a new type of UITF funds called FEEDER Funds. BPI has just launched its BPI US EQUITY INDEX FEEDER FUND and BPI EUROPEAN EQUITY INDEX FEEDER FUND.
If you are interested in learning more about feeder funds and these new BPI UITF investment products, read on.
In a Nutshell
The BPI US EQUITY INDEX FEEDER FUND is a UITF that invests in an ETF (Exchange Traded Fund) that follows the S&P 500 index in the United States.
The BPI EUROPEAN EQUITY INDEX FEEDER FUND is a UITF that invests in an ETF that follows the EURO STOXX 50 Index in Europe.
How are these different from the existing BPI UITF Global Equity Fund of Funds?
The main difference is the investments scope and exposure. The feeder funds only follows a single index in a certain region. The Globl Equity Fund of Funds allocates its funds in different global funds with market exposure all over the world. The image below shows the allocation as of June 30, 2014 of BPI Global Equity Fund of Funds.
As you can see in the picture, the Global Equity Fund of Funds has exposure not only in the US or Europe. It also has exposure in Japan, UK, Asia Pacific, and other Emerging Market Equities.
We love these funds because it allows us, local investors, to directly invest in the growth stories of other nations.
A. THE BASICS OF FEEDER FUNDS
1. What is a Feeder Fund?
A Feeder Fund is a UITF which invests at least 90% of its assets in a single Collective Investment
Scheme known as the Target Fund (e.g. Exchange Traded Fund (ETF)).
2. What are the advantages of a Feeder Fund?
Feeder Funds provide an efficient and easy access to investment outlets otherwise available
or accessible only to large institutional investors. It allows for a very focused investment
strategy given its single underlying investment, and thus can be easily added to an
investment portfolio. It is a great diversification tool because:
a. It invests in a fund that holds various underlying securities, which taken collectively, is
expected to provide the risk-return combination to satisfy the investment objective of
the client.
b. Especially for Feeder Funds invested in global funds, it is an effective means for
accessing international/global securities for those who want to increase their
exposure other than the Philippines.
B. THE NEW BPI FEEDER FUNDS
3. What are the two (2) new equity index feeder funds?
The BPI US Equity Index Feeder Fund, operating as a Feeder Fund is an index tracker Unit
Investment Trust Fund (UITF) that aims to achieve for its participants investment returns that
closely track the total return of the S&P® 500 Index, before fees and expenses. The Fund
invests at least 90% of its assets in the Target Fund, SPDR® S&P500® ETF Trust.
The BPI European Equity Index Feeder Fund, operating as a Feeder Fund is an index tracker
Unit Investment Trust Fund (UITF) that aims to achieve for its participants investment returns
that closely track the total return of the Euro Stoxx 50® Index, before fees and expenses. The
Fund invests at least 90% of its assets in the Target Fund, SPDR® Euro Stoxx® 50 ETF.
4. Why should I invest in the BPI US Equity Index Feeder Fund/BPI European Equity Index Feeder
Funds?
If you have been wanting to invest in the stocks comprising the S&P® 500 Index and/or the
Euro Stoxx 50® Index, now is your chance!
The BPI US Equity Index Feeder Fund is the first Fund in the country to track the performance
of one of the major US stock indices, the S&P® 500 Index. Based on MSCI Indices over the
past 10 years, US equities, compared to other regional stock markets, exhibit relatively lower
volatility.
The BPI European Equity Index Feeder Fund on the other hand, is the first Fund in the country
to track the performance of one of the major stock European stock indices, the Euro Stoxx
50® Index.
These funds are appropriate for investors seeking capital growth for their US dollars over the
long-term.
5. What is the minimum initial amount to be able to invest in the BPI US Equity Index Feeder
Fund/BPI European Equity Index Feeder Fund?
Minimum initial investment for each of the Funds is One Thousand US Dollars (USD1,000) only,
and minimum additional investment of Five Hundred US Dollars (USD500) only.
source: bpiassetmanagement.com
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