BPI unit to launch euro bond fund

BPI Asset Management, a subsidiary of the Bank of Philippine Islands (BPI), will launch the country’s first euro bond fund issue utilizing the euro as its investment currency unit.

The euro bond is a mutual fund which already has an initial fund of 820,000 euros (roughly P5 million). The Ayala Life Fixed Income Fund (ALFM), run by BPI Asset Management, is the single biggest peso-denominated mutual fund in the country.

A mutual fund is a pool of funds from individual and corporate accounts handled by a fund manager which is usually a non-bank financial institution. A trust fund is roughly the same except that it accepts higher initial investments and is managed by a bank’s trust department.

In March 2004, BPI Asset Management also launched the ALFM Dollar Bond Fund, formerly known as the Far East Dollar Bond Fund.

Initial minimum investment for the euro bond fund is $5,000 (roughly P250,000), or about the same amount for most mutual funds managed by BPI Asset Management.

The funds will, in turn, be invested in euro investment instruments such as the Republic of the Philippines (ROP) euro bonds.

BPI is an active player in ROPs. At present, the bank invests 69 percent of its dollar funds in long-term Philippine bonds and other debt instruments with 26 percent in short-term bonds.

As of September 2005, the ALFM dollar bond fund reached P4.3 billion while the Ayala Life Fixed Income Fund reached P40.5 billion of the total bond funds in the mutual fund industry of P71 billion.

BPI Asset Management also handles the Philippine Index Fund Corp. with assets reaching P507 million.