Philippine SEC expands retail investor diversification through umbrella fund structure

Retail investors in the Philippines can now diversify their portfolios across different asset classes within a single investment firm. The Securities and Exchange Commission (SEC) established this through Memorandum Circular No. 14, Series of 2026, issued on April 8. The framework allows open-end investment companies to operate multiple sub-funds under a single legal entity. This structure enables a firm to offer separate portfolios for equity, bonds, and fixed-income strategies. Unitholders may transfer between sub-funds within the same umbrella, subject to disclosed fees and limits. To qualify, firms must have at least P100 million in paid-up capital and include "Unitized Umbrella Fund" in their name. Existing companies may convert to the structure through a majority shareholder vote and amendments to their articles of incorporation. To protect investors, the rules require strict segregation of assets and liabilities. Fund managers must treat each sub-fund as a separate investment company for reporting purposes, including monthly sales and redemption reports and separate quarterly and annual financial statements. All annual filings must be audited by SEC-accredited independent auditors.