BPI unit sees economic recovery

The Asset Management and Trust Group of the Bank of the Philippine Islands (BPI Asset Management) forecasts an improving business climate and a continuing economic recovery this year.

In an briefing, BPI Asset Management forecasts gross domestic product (GDP) to grow at four percent while inflation will remain between 4.5 percent and five percent.

Stable to declining fuel prices, as well as the expected stability of food supplies, and the peso will combine with continuing soft consumer demand to keep inflation lower than the average 6.1 percent registered last year.

The group also sees a recovery of sorts for GDP with its expected four percent gain this year, matching year 2000 level, from last year’s 3.4 percent. This will be helped along by a recovery in exports where the US will remain the country’s single largest trading partner with a 27-percent share followed by Japan’s 13 percent.

The peso is also expected to go from strength to strength. On a year-to-date basis, it posted the highest appreciation rate among regional currencies gaining 0.78 percent. This year, the group has lowered its forecast average to P51-P52 per dollar citing a healthy international reserve level, weak imports, the re-entry of foreign capital into the country, and the absence of an economic crisis as seen in Argentina and Japan last year.

BPI Asset Management believes that the economy will be able to muster enough strength to weather several negative factors such as peace and order problem, a country risk rating that can do with some improvement, high non-performing loan ratios among some local banks, an expected slow recovery in the US and Japanese economy and marginal gains in exports.

It recommended a line of high-powered investment products to its select clientele composed of high net-worth individuals and corporations. The products presented are calculated to allow their clients to take full advatange of the upside potentials and prospects of a recovering economy.

Among these products are two of its retail global common trust funds (CTFs), which are: the BPI Global Philippine Fund, a marked-to-market fund invested in dollar denominated fixed income securities issued by the Philippine government and prime local corporations, which registered a yield of 6.17 percent in 2001; and the BPI International Fund Plus which is a fund invested in local and international securities as well as foreign-managed funds and foreign mutual funds, grew 5.94 percent in 2001.

Both CTFs have consistently outperformed the 90-day US Treasury notes which averaged 4.27 percent in 2001. BPI International Fund Plus has also consistently outperformed the 30-day US dollar time deposit rate.

In the peso category and with over P100 billion in asset managed, it enjoys a 23 percent market share and leads the bank in the second place by over 100 percent.

It claims to lead the market in three main product categories: trust, investment management, and CTFs. With its 37 percent share of total investment management accounts, it funds under management is three times larger than the second place bank.

In the local mutual fund sector, one of the managed funds known as the Ayala Life Fixed Income Fund (ALFM), accounts for nearly half of the mutual fund industry. ALFM is invested in peso denominated instruments issued by the government and prime local corporations. It is not subject to reserve requirements and therefore offers potentially higher yields than comparable CTFs.

Its income is exempt from tax and investors also get P100,000 free life insurance coverage from Ayala Life Assurance Inc.

Despite its size, ALFM has consistently outperformed the benchmark 91-day Treasury bills. ALFM is being sold through the authorized mutual fund agents of BPI Investment Management Inc. and Ayala Financial Services and Insurance, Inc.

For clients with longer-term investment requirements, BPI Asset Management offers a long term, tax-exempt investment product called BPI Legacy. Packaged as a living trust account tailor-fitted to an investor’s individual investment needs, BPI Legacy is the first tax-exempt, long-term investment product in the market.