Philippines eases investment restrictions for funds in move by regulator

The Philippines’ securities overseer has eliminated a five-year-old rule that restricted equity funds, balanced funds, and multi-asset funds to holding only up to 20% of net assets in a single business group, typically large conglomerates. This change, however, is only effective for funds distributed within the country. The decision to lift this limit came after receiving multiple requests from various fund managers representing their respective managed funds, as announced in a circular by the Philippines Securities and Exchange Commission (SEC) on April 2.

There will not be any penalties for violations of the ownership restriction, which was implemented in May 2020. The cap will continue for funds distributed across borders, such as those marketed under the ASEAN Collective Investment Scheme Framework.

This move by the regulatory body signifies a significant shift in promoting more flexibility for local asset managers in the Philippines. Being able to allocate investments without the previous 20% ownership constraint in one business group offers fund managers more freedom and discretion in optimizing their investment strategies for better returns.

The adjustment will likely benefit local investment funds and enable them to make more strategic investment decisions without being hampered by the former restriction. The lifting of this cap could lead to diversified and improved investment portfolios for these funds, potentially amplifying returns and enhancing risk management practices.

It is important to note that this change in regulations pertains specifically to funds circulated within the Philippines. Funds marketed across borders, like those under the ASEAN Collective Investment Scheme Framework, will still be subject to the 20% ownership limit for a single business group.

Overall, this amendment by the Philippines’ securities regulator is a favorable development that aims to enhance the operational freedom of local asset managers. By removing the ownership restriction previously imposed on certain funds, the regulatory body is fostering a more conducive environment for fund managers to navigate the local investment landscape effectively.

This change is set to provide local asset managers with greater flexibility and autonomy in managing their investment portfolios. The elimination of the ownership cap is a positive step towards empowering fund managers with the freedom to make investment decisions that align more closely with their objectives and market conditions.