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Shaping a new generation of trust investors


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At the heart of the boom in e-commerce are the millennials and Generation Z, who are now estimated to comprise some 70% of the Philippine population. This demographic now accounts for a majority of the market, and is driving the growth of all things online. Yet their financial habits make them a challenging proposition.

The Trust industry, as with most other businesses today, is quickly evolving towards digitization by investing and rolling out digital/online capabilities and creating an easy customer experience, with greater focus given now on the growing number of investors who are millennials and Gen Z.

Yet for all the tech-savviness and preference of this demographic to do personal investments online, the Trust industry would best serve this generation well by also elevating their financial literacy in the process. Their natural grasp of technology and ability to harness its vast potential notwithstanding, it all starts with enabling them to fully understand the potential — and promise — of investing correctly. Shaping this new generation of trust investors means helping them fully understand the risks involved while elevating their knowledge of making their money work for them with products like Unit Investment Trust Funds or UITFs.

In general, there is a growing level of interest on investing in products such as UITF but there are some hesitations. Maricar Lopez, Security Bank trust officer and former Trust Officers Association of the Philippines (TOAP) board member, reveals that “a greater number of Filipinos still prefer to take care of their funds by placing in the traditional time deposit products, taking comfort that their funds have a maturity date. On the other hand, there are those who are searching for much higher return on their investments and instead are weighing the option of participation in corporate bonds and in buying government securities.”

The beauty of today’s investment environment is that there are plenty of products to be had by this new generation of investors. More significantly, they can make their money earn for them even with just a relatively small amount to start off with, particularly in UITF. Investing, for first-timers especially when done on one’s own, can however be daunting if the product, as well as the financial market, investment environment, and even local and global events, are not understood properly. There is also the question of one’s appetite for risk.

So how does it work? UITFs are sold by institutions supervised by the Bangko Sentral ng Pilipinas, such as banks. Investors can buy units of participation in the fund, whose value is called the Net Asset Value per Unit (NAVPU). The NAVPU, which indicates the current market prices of the instruments that make up the UITF, rises or falls depending on the movement of market prices. The UITFs are then invested in different investment outlets: money market funds for example will be put in short-term debt instruments; bond funds will be invested in government or corporate bonds; balanced funds will have a mix of stocks and bonds; and equity funds will be invested in shares of stock. The choice of product will depend on one’s financial goals, whether to aggressively grow their funds or just to secure their investment over time and gain a little earning along the way, as well as one’s risk appetite.

With UITFs, investing can start even with just P10,000. Hazel M. Navarro, Philippine Trust Company trust officer and current TOAP Director for UITF Development, presents more advantages in going for UITFs. “As a retail product, it requires a very small investment outlay that anybody can actually really start investing in it as early as you have a regular cash flow for yourself. It’s also a diversified product, meaning it has a lot of investment outlets already in the funds so you are not just exposed to one outlet at any given time. There’s also an expertise in the management. Yes, you can do your own investing in the stocks, but are you knowledgeable in it well enough to put all your funds in it? At least with the UITF, this is professionally managed by experts.” And because they are liquid, you also enjoy the advantage of being able to withdraw your funds when the need arises, subject to fees in some cases.

In addition, Noel S. Reyes, SBC Trust Asset Management Group chief investment officer, offers that “UITFs are very liquid and readily accessible investments that give you various return opportunities across varying risk appetite choices, time horizons, and objectives.” He emphasizes that education really is key to distinguishing UITFs from other investments and that potential investors need to compare them in detail with these other investment products to properly understand and make the best choice.

By casting its net wider, the Trust industry can include the many other Filipinos who may have the capacity to build up their funds but are sadly lacking the financial literacy to appreciate its value. This annual Trust Consciousness Week is both a challenge and an opportunity to continue advocating for greater involvement among the youth and other sectors in our society that remain unengaged in financial wellness. Shaping the next generation of trust investors will open more opportunities for a greater number of Filipinos to attain financial growth.

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