BDO UNIBANK, Inc. (BDO) saw its assets under management (AUM) grow to P1 trillion as of September on the back of strong demand for its unit investment trust fund (UITF) products amid the coronavirus pandemic.
BDO’s Trust group reported that its UITF business expanded by 35% at end-September, the bank said in a disclosure to the local bourse on Tuesday.
Rafael G. Ayuste, Jr., BDO senior vice-president and trust officer, said clients bought the product “due to its ready availability for both subscriptions and redemptions as well as the ease of access through the branches and online.”
“We saw the UITF volumes increase substantially despite the pandemic,” he was quoted as saying. “The clients see and appreciate the opportunities that the current market presents which will potentially result to significant growth in their investment returns as the market recovers.”
UITFs are pooled funds from depositors which are managed by a trust company or a bank’s trust department that decide on where to invest the said funds in order to generate income.
UITF gains mirror current market prices, which determine the rate of return for clients. However, investment platforms vary and are matched to a player’s appetite, which is determined through a risk tolerance assessment conducted by these agents.
These can be invested in instruments like money market securities, bonds and equities, which offer higher return than traditional bank deposit products.
BDO’s Trust group offers peso- and dollar-denominated UITFs to cater to investors with different risk appetites and objectives.
The bank’s UITFs require a minimum of P10,000 for peso-denominated money market and bond and equity index funds and $500 for dollar-denominated money market, medium-term bonds, and global feeder funds.
It said it is making “aggressive efforts” to increase its penetration to maintain or increase its market share, which currently stands at 25%.
Mr. Ayuste said the ongoing pandemic has encouraged many clients to grow their wealth through UITFs and money market funds, especially with uncertainties continuing to affect financial markets.
“This way they are able to generate positive albeit lower returns particularly during the height of the pandemic when there was so much uncertainty. We have likewise seen some long-term clients factoring in recovery and are taking the opportunity to buy more equities at current market prices which really presents great upside potential,” he said.
“We continue to enhance our product and service delivery to ensure ease of access and simplification of client experience,” Mr. Ayuste added.
BDO booked a net income of P16.6 billion in the first nine months, down 48% from P32.1 billion in the comparable year-ago period, as it set aside more loan loss provisions amid the pandemic.
The Sy-led bank’s shares closed at P90 apiece on Tuesday, up by P1.10 or P1.24% from its previous finish.