PSE opens doors to real estate investment funds

The Philippine Stock Exchange is opening its doors to real estate investment funds as part of an effort to develop and expand the financial products available to the investing public.

PSE Chairman Alicia Arroyo said the real estate investment fund facility, which the exchange hopes to launch within the year, will help inject liquidity in the property market.

Arroyo said a number of investment banks have signified their interest to handle this type of fund.

PSE president Ernest Leung said the investment banks will pool the assets that would be offered for sale to investors.

A real estate securities fund seeks to obtain a favorable long-term total return through both capital appreciation and current income by investing primarily in the equity and fixed-income securities of companies involved in the real estate industry.

Real estate investment trusts are being offered in stock exchanges in Japan, Singapore and Australia.

The fund will allow investors to build more diversified and focused investment portfolios.

Many studies have shown that investing in real estate provides investors with the potential for increased dividend income as well as the potential for reduced overall portfolio risk and higher returns.

Real estate investment trusts – also known as real estate stocks – have outperformed most other major market benchmarks over three decades with less volatility.

The PSE is studying the marketing and possible listing of more mutual funds. It earlier announced plans to list exchange-traded funds to give investors more choices on where to park their money.

ETFs are open-ended funds which track indexes or sectoral basket of securities that are listed and traded on a stock exchange. Investors may diversify their portfolios by investing in a single unit of ETF which conveys ownership in a group of securities representing specific industries or market sectors.

Because ETFs are exchange-traded, they are continually priced and can be traded intra-day. They enable investors to easily rebalance their portfolio at a low cost or to take advantage of a market trend.

Similar to stocks, ETFs can be bought or sold in the board subject to modest management fees, regular stock transaction taxes and expenses. Sun Life Asset Management Co. Inc., a subsidiary of listed insurance giant Sun Life of Canada, has signified its interest to list its ETFs in the exchange. This will be coursed through the trading participants initially as distributors of mutual funds and ultimately as traders upon listing with the exchange. - Zinnia dela Peña