Eligible investments for PERA funds listed

Iris Gonzales – The Philippine Star

August 29, 2022 | 12:00am

MANILA, Philippines — The Securities and Exchange Commission (SEC) has drawn up its list of eligible investments for Personal Equity and Retirement Account (PERA) funds.

This will guide investors looking for options to park their funds instead of falling for get-rich-quick schemes such as those offered mostly by investment scams.

In a memorandum circular, the SEC said PERA funds may be invested in equities, bonds, funds and other securities. It provides for the Rules on Qualified and/or Eligible Personal Equity and Retirement Account (PERA) Investment Products, pursuant to Republic Act 9505 or the PERA Act of 2008 and its implementing rules and regulations.

According to the SEC, PERA funds may be invested in newly formed mutual funds, including any sub-fund of an umbrella fund and exchange-traded funds whose fund managers have a track record for the past five years prior to the application of being responsible for the operation and management of a registered mutual fund which has been offered to the general public.

The name of the newly formed mutual fund must contain the words “Personal Equity and Retirement Account” or “PERA,” the SEC said.

Real estate investment trust (REIT) shares, corporate bonds with an investible rating issued by an accredited credit rating agency, and equity securities that form part of the Philippine Stock Exchange (PSE) Dividend Yield Index are also deemed eligible PERA investment products, the SEC said.

The new guidelines identify securities registered pursuant to the requirements of Republic Act 8799 or the Securities Regulation Code, and Republic Act 2629 or the Investment Company Act, that are deemed to be eligible PERA investment products.

Furthermore, the guidelines identify government securities, securities issued by the Bangko Sentral ng Pilipinas (BSP), and corporate bonds issued by banks in compliance with BSP requirements as eligible PERA investment products.

For equity securities those included in the PSE index (PSEi) may be classified as eligible PERA investment products, provided that the PSE certify to the SEC that the equity securities met the requisites of being non-speculative, readily marketable, and with a track record of regular income payment to investors.

The SEC may qualify other securities to be eligible as PERA investment products if the product is non-speculative, readily marketable, and has a track record of regular income payment to investors.

On the other hand, a security loses its eligibility as a PERA investment product when the SEC declares it to be ineligible. A registered equity security may also lose its eligibility if its registration statement gets suspended or revoked or in the case of a PSEi member security, if it is removed from the main index.

Similarly, corporate bonds may be deemed ineligible if they are declared to be in default by a competent authority or person in accordance with applicable laws, rules, and contracts, and if their credit rating is downgraded to a non-investible grade. The same provisions apply for corporate bonds issued by banks.

In all, a security that has been deemed eligible by the SEC may likewise lose its eligibility after it has been found to have lost one or all of the required characteristics of being non-speculative, readily marketable, and provider of regular income payment.

The rules require issuers of securities qualified to be eligible PERA investment products to comply with the reportorial requirements set by the SEC.