UCP Review

Trust Banking Group

 UITF Certification Program
• BSP-required certification for all personnel involved
in the sales of UITF
– TBG
– IDD
– Private Wealth
– Branches (BHs, BOOs, NACs)
• Different from the internal certification program
• By January 2023, only UCP passers will be allowed to
market UITFs

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 UITF Certification Program

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 UITF Certification Program

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.4 Investment and Trust Basics
Asset Classes
• Cash and equivalents
– Currency, bank deposits

• Fixed Income
– Bonds: pay regular/fixed income in the form of interest

• Equities
– Ownership of a company

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.4 Investment and Trust Basics
Duration
• How a bond’s price is affected by the change in
interest rates
• Higher duration, higher risk, but higher potential
returns (MSTF up to 1, Max 3 BF up to 3, Max 5 BF up
to 5)

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.4 Investment and Trust Basics
Sharpe Ratio
• Additional return (income) for every unit of risk
taken

Information Ratio
• Additional return (income) for every unit of risk
taken relative to the benchmark

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.1 UITF Products
• Open-ended
– No maturities, unlimited participants
• Pooled
– Funds from various investors are invested as one
• Trust Entity
– A company given a trust license by the BSP
• Participation
– Units of participation (representing an investor’s beneficial
interest in the fund)

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.1 UITF Products
Types
• Money Market Funds – short term, fixed income securities with duration <
1 (MMMF, MSTF)

• Bond Funds – Fixed income securities with duration of > 1

• Balanced Funds – mixed portfolio of bonds and stocks

• Equity Funds – mainly in stocks

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.1 UITF Products
Types
• Feeder Funds – will invest in 1 other fund (ex. Aspire funds)

• Fund of Funds – will invest in more than 1 other funds

• Multiclass Funds – more than 1 class of units in the fund

• Unit Paying Funds – income of the fund is distributed as units

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.1 UITF Products
Net Asset Value (NAV)

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.1 UITF Products
Net Asset Value Per Unit (NAVPU)
• Divide NAV by the total number of outstanding units
• “Price” of each unit

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.1 UITF Products
Fund Benchmark
• Performance of the fund will be measured against the
benchmark
• “KRA” of the fund manager

Market Index
• Composition of several investments or stocks which
represents an entire market
• Ex. PSE Index (30 companies) which represent the entire PH
stock market

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.2 Regulations and Operations
Allowable Investments
• Any financial instrument that is tradable, and has regular two-
way prices
• Securities will be held by a 3rd party custodian that will have
its own marked to market valuation

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.2 Regulations and Operations
Exposure limits
• Up to 15% of market value – exposure to any entity and
related parties
• 15% exposure limit to a single entity/company for exchange
traded securities (i.e. stocks). For index tracker funds, it is the
actual weight of the stock in the index or 15%, whichever is
higher
• No limits for non-risk assets (cash/deposits, govt sec)
• If the limit is breached due to market movement, the fund
manager is given 30 days to correct

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.2 Regulations and Operations
Disclosures
• Basic details of the fund and accompanying risks
• Contact details of the trustee bank
• Clause: A UITF is not a deposit product and any gain/loss is for
the account of the investor
• Marketing materials: may provide historical performance, but
no guarantees of similar results in the future

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.2 Regulations and Operations
Operating Guidelines
• Pooled fund accounting method
• Subscription is through units
• Each unit has uniform rights and privileges
• Valuation is through NAVPU methodology
• UITFs are exempt from liquidity reserves, SBL, and DOSRI

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.2 Regulations and Operations
Documents
• KYC docs
• Customer Suitability Assessment (CSA) Form (for Metrobank, it’s
SAF)
• CSA waiver if applicable
• Confirmation of Participation/Redemption (for Metrobank, it’s
Confirmation of Transaction/COT)
• General risk disclosures (our RDS, which is now included in the new TOF)

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.3 UITF Sales Process
What to emphasize to clients
• Details of the fund (structure, risk profile, objective, etc.)
• CSA prior to admission to determine the suitable fund
• Through units of participation
• Txns will be based on the latest NAVPU
• No guarantees in income
• No PDIC coverage since UITFs are not deposits
• Marked to market valuation

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.3 UITF Sales Process
Client Profiles
• Conservative – preservation of capital at all times, low risk,
short investment horizon

• Moderate – willing to take on a certain level of risk for slightly

higher potential return

• Aggressive – willing to take to higher risk, even potential loss

of capital, for higher potential return in the long term

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.3 UITF Sales Process
To determine suitability (S.H.O.R.E.)
• Size – are these excess funds?

• Horizon – how long will the money be invested?

• Objective – what does the client intend to achieve?

• Risk tolerance

• Experience

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.3 UITF Sales Process
Client Suitability Assessment (CSA or SAF for us)
• Done prior to investing in UITFs

• Will guide you to recommend the proper fund type

• To be updated every 3 years or whenever there are changes

to the client’s objectives or circumstances

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 M.5 Code of Conduct and Ethics
• Prudent Man’s Rule – it is as if you are taking care of your own
money/interests
• Undivided loyalty – client over bank’s interest
• Conformity to the highest standards of integrity
• Avoid conflicts of interest. If there are any, fully disclose such
to the client
• Refuse transactions that may damage the reputation of the
institution

Trust
Banking 2019 Metropolitan Bank & Trust Company | ABC-MD
This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
Group form without prior consent of the authors.
 by

2019 Metropolitan Bank & Trust Company | ABC-MD

This document is for internal use only and may contain privileged, proprietary or otherwise private information. It must not be released to other parties in whatever
form without prior consent of the authors.