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  Investment Restriction for Philippine Mutual Funds  

1. Mutual funds may not invest in any of the following:

  • Margin purchase of securities (investments in partially paid shares excluded)

  • Commodity futures contracts

  • Precious Metals

  • Unlimited liability investments

  • Short selling of currencies

  • Short selling of investments

  • Other investments as prescribed by the SEC

2. Mutual funds are not allowed to incur any debt or borrowing unless at the time of the occurrence there is asset coverage of at least 300%.

3. Investment companies cannot undertake in an underwriting or selling group in connection with the public distribution of securities except for its own capital stock.

4. Funds cannot make any investment for the purpose of exercising control of management.

5. The maximum investment any fund in any single enterprise shall not exceed ten percent  (10%) of the fund's net asset value except obligations of the Philippine government or its instrumentalities.   Provided, that in no case shall the total investment of the fund exceed ten percent (10%) of the outstanding securities of any investee company.

6. For liquidity purposes, at least 10% of all funds shall be invested in liquid/semi-liquid assets such as Treasury notes or bills, BSP Certificates of Indebtedness, and other government securities or bonds.   Savings and time deposits with any government or commercial bank, provided that in no case shall such savings or time deposits be accepted or allowed under a “bearer”, “numbered” account or similar arrangements.

7. The investment of funds in real estate properties shall not exceed 25% of the total investment portfolio.

8. Funds cannot engage in lending operations without prior approval of its Board of Directors.  Such approval shall be limited only to corporations or other entities, private or public, determined to be financially sound by the Board.

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Mutual Fund 101
  What is a Mutual Fund?
  Why Invest in a Mutual
  Advantages in Investing in a Mutual Fund
  Investment Restriction for Philippine Mutual Funds