From AB Capital's The Opening Bell: Three Moves
Event
BSP Circular 1234 keeps the general UITF single-issuer cap at 15% but allows 20% exposure for exchange-traded equity securities. Equity index trackers may follow actual benchmark weights, potentially above 20%, once the circular takes effect in early June.
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In our view, the reform improves flexibility for equity UITFs and index trackers, but the impact is limited by an unresolved aggregate exposure issue. ICT's roughly 24% PSEi weight still conflicts with the 15% related-party aggregate cap, creating compliance uncertainty.
Catalyst
Key trigger is BSP clarification. If index trackers are explicitly exempted from the 15% aggregate cap, funds can replicate the PSEi more closely. Without guidance, trust officers may cap ICT at 15% to 20%, sustaining tracking error.
Action
We think the near-term read-through is neutral to mildly positive for UITF flows, but not enough to unlock full benchmark replication. Monitor BSP guidance and trust-sector implementation, as any clarification could affect ICT demand and index-tracking strategies.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.