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ING
Investment Management, a member of one of the world’s
leading financial institutions ING Group, is urging the
Securities and Exchange Commission (SEC) to create an
opportunity for local preneed companies to expand their
investment portfolio.
Speaking
before the 6th Preneed Consciousness Week, ING
Investment Management chief investment officer Paul
Joseph M. Garcia said preneed firms should be allowed to
invest in other alternative instruments that would give
them adequate level of returns.
An
increase in equity exposure in the stock market is one
way especially now that it is on the bull cycle, Garcia
said. “Preneed firms are currently allowed to invest up
to 25 percent of their trust fund in the equities
market. Our recommendation is to raise it to 40
percent,” he said.
Another
good investment vehicle is the real-estate investment
trust fund (REIT), a security that sells like a stock on
the major exchanges and invests in real estate directly,
either through income-producing properties or mortgages.
It combines the capital of many investors and enables
small investors to participate in real-estate
investments.
“Once
the regulation is in place for REIT, we can use that as
an investment vehicle on top of an actual real estate.
REIT is more liquid unlike real property which is very
hard to liquidate especially when the market is down,”
Garcia explained.
He also
proposed that preneed companies be allowed to invest at
least 15 percent of their trust fund offshore.
“Right
now, they are not allowed. But it looks like the SEC
will include a provision in the guidelines allowing them
to look for opportunities abroad,” he said.
ING
Investment Management, the trust department of ING Bank,
is now working closely with the Trust Officers
Association of the Philippines (TOAP) to come up with
recommendations on the guidelines governing the trust
fund of preneed firms.
Earlier,
Prudentialife Plans president Jose Alberto T. Alba said
the SEC guidelines should make way for provisions
allowing preneed firms to look for investment
opportunities in offshore markets to take advantage of
the lower interest rates.
“We
would appreciate it very much if we can be given the
flexibility to shift our investment allocations,” he
said.
Preneed
companies invest in bonds, the stock market and
sometimes property developments to grow their
investments.
From
January to November 2006, the preneed industry booked
sales of P17.57 billion, 7.08 percent lower than the
P18.9 billion it booked in the same period in 2005.
Data
released by the Securities and Exchange Commission
showed the total number of plans sold fell 23.4 percent
during the 11-month period to 217,930 compared with
284,307 during the same period in 2005. |
