MIDTERM Flashcards
It is the policy of the State to generate,
preserve and grow national wealth, create jobs, promote trade and investments, foster
technological transformation, strengthen
connectivity, expand infrastructure, and achieve
energy, water and food security.
signed by President
Ferdinand R. Marcos Jr. on July 18,
2023.
“Maharlika Fund Act of 2023”.
just like any other
investment funds around the
world, refers to a pool of money
or funds invested to a particular
asset, item, company, or project
with the goal of generating
income or appreciation.
It will be managed by the “Maharlika Investment Corporation.”
Maharlika Investment Fund or
MIF,
is a corporate
investment body that manages the MIF.
Maharlika Investment Corporation (MIC)
It is a 9-member Board of Directors (BOD) which consists of the following:
- Secretary of Finance – as the Chairperson in an ex-officio capacity
- President and CEO of MIC
- President and CEO of the Landbank of the Philippines
- President and CEO of the Development Bank of the Philippines
- Two (2) regular Directors, appointed by the President for a term of
three (3) years - and Three (3) independent Directors from the private sector,
appointed by the President for a term of one (1) year
“as a result of one’s status or position” or “denoting or relating to a member
of a body who holds the role as a result of their status or another position they hold.
*ex-officio capacity-
means “from the office”
Ex officio (latin)-
is an insurance of bondable public officer under the Fidelity Fund
to assure:
Fidelity Bond
are the employees of the government of
the Philippines whose duties performed permits or requires the custody of
funds or properties for which he is accountable be deemed bonded and his
fidelity insured in accordance with Public Bonding Law
The Accountable Officials/Employees
Advisory Committee
Secretary of the Department of
Budget and Management
(DBM)
Secretary of the National
Economic and Development
Authority (NEDA) and
the Treasurer of the Philippines
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There will also be a Joint Congressional Oversight
Committee (JCOC) and is composed of
fourteen (14) members from the House of Representatives and the Senate, each having 7 members. It will be
co-chaired by the Chairpersons of the House on Banks and Financial Intermediaries and the Senate Committee on Banks, Financial Institutions
and Currencies.
The MIC shall quarterly submit all investments, portfolio,
and audit reports of the MIF to the JCOC.
Aside from the strict examination from numerous bodies, an Audit Commitee, the Commission on Audit, and an internal and external auditors will conduct
regular audit within the MIC and MIF. The internal auditor shall be appointed by the BOD, and will provide audit reports regularly. While the external auditor shall
come from an internationally recognized auditing firm to conduct annual audit for three (3) consecutive years.
Where will the initial funds of MIF come from?
500 billion
Preffered share= 125 to be made available
for subscription of
national government
exept SSS, GSIS,
Philhealth, OWWA,
PVAO
common share= 375 (to be subscribe by National Government)
LBP 50
DBP 25
GOv 50
Total 125
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The MIF will have an initial funding of P500 billion equivalent to five (5) billion shares.
- Bangko Sentral ng Pilipinas – In two years, upon the effectivity of MIF Bill, 100
percent of BSP’s total declared dividends not exceeding P50 billion. - Government share in PAGCOR – For a period of five (5) years, the PAGCOR and
all its government-owned gaming operators shall give 10 percent of its revenues, provided that the share intended for the Universal Health Care will
not be diminished. - Department of Finance - Privatization and Management Office
- Royalties and special assets
- Properties, real and personal
- Landbank of the Philippines – P50 billion, not exceeding 25 percent of their
net worth - Development Bank of the Philippines – P25 billion, not exceeding 25 percent
of their net worth
NOTE !
It can also be noted that according Article III, Section 12 of the law, that Government-Owned or Controlled Corporations (GOCCs) providing the social security
public health insurance of the public such as Social Security System (SSS), Government Service Insurance System (GSIS), PhilHealth, Pagibig Fund, Overseas
Workers Welfare Association (OWWA), and Philippine Veterans Affairs Office (PVAO) are absolutely prohibited
to invest in MIF.
Where will MIF be invested?
Cash, foreign currencies, metals, and other tradeable commodities;
Fixed income instruments issued by sovereigns, quasi-sovereigns and
supranational;
Domestic and foreign corporate bonds;
Equities;
Islamic investments such as Sukuk bonds;
Joint Ventures or Co-Investments, mergers, and acquisitions;
Mutual and exchange-traded funds;
Infrastructure projects;
Programs and projects on health, education, research, and innovation,
Investments that promote sustainable development;
Loans and guarantees to Filipino or foreign investors
Investments in real estate, including agro-industrial estates and
economic zones, estate infrastructure and other development projects
_______is an Islamic financial certificate,
similar to a bond in Western finance,
that complies with Islamic religious
law commonly known as ______
sukuk
Sharia
Within_______________ after the bill was
signed into law, the Treasurer of the
Philippines together with the Government
Financial Institutions, will create the
Implementing Rules and Regulations (IRR) of
this act that will state how the act will be
implemented.
ninety (90) days
means combined holding of many kinds
of financial securities i.e. shares, debentures, government bonds, units and other financial assets.”
is a combination of various
instruments of investment.
It is also a combination of
securities with different
risk-return characteristics.
“Portfolio”
refers to the various
assets of an investor which are to be considered as
a unit.
It is not merely a collection of unrelated assets but a carefully blended asset combination within a unified
framework
investment portfolio
is the art and science of
selecting and overseeing
a group of investments
that meet the long-term
financial objectives and
risk tolerance of a client,
a company, or an
institution
means selection of securities
and constant shifting of the portfolio in the light of varying attractiveness of the constituents of the
portfolio.
includes portfolio planning,
selection and construction, review and evaluation of securities.
Portfolio Management
is an important aspect of portfolio
revision.
is a crucial factor while switching
between shares and bonds. Investors may switch from bonds to shares in a bullish market and vice-versa in a
bearish market.
Timing
Objectives of Portfolio Management
Stability of Income:
Capital Growth:
Marketability:
Liquidity i.e. nearness to money:
Diversification:
Favorable Tax Status (Tax Incentives):
Security not only involves keeping the principal sum
intact but also keeping intact its purchasing power
intact.
Stability of Income
means protection for investment against loss under reasonably variations.
Safety
This can be attained by reinvesting in growth securities
or through purchase of growth securities.
Capital Growth:
It is the case with which a security can be bought or sold. This is essential for providing flexibility to
investment portfolio.
Marketability:
It is desirable to investor so as to take advantage of attractive opportunities upcoming in the market.
Liquidity i.e. nearness to money:
The basic objective of building a portfolio is to reduce risk of loss of capital and / or income by investing in
various types of securities and over a wide range of industries.
Diversification:
The effective yield an investor gets form his investment
depends on tax to which it is subject.
Favorable Tax Status (Tax Incentives):
is on-going process
involving the following basic tasks:
Identification of the investor’s objectives, constraints and
preferences.
Strategies are to be developed and implemented in tune with
investment policy formulated.
Review and monitoring of the performance of the portfolio.
Finally the evaluation of the portfolio and make some
adjustments for the future.
Portfolio Management Process
ultimate goal is to
maximize the investments’
expected return within an
appropriate level of risk
exposure.
the portfolio manager’s
When managers actively pick investments in an effort to outperform some
benchmark, usually a market index.
ACTIVE PORTFOLIO MANAGEMENT
When a fund manager attempts
to mimic some benchmark,
replicating its holdings, and
hopefully , performance
PASSIVE PORTFOLIO MANAGEMENT
is independently
managed by portfolio manager.
Portfolio Managers can execute
the changes he/she believes are
required and make them without
the consent of the investor.
Discretionary Portfolio Management
requires approval for buy and sell
transactions in the portfolio.
It is managed by both: the portfolio manager and the investor of the PMS.
Non-discretionary Portfolio management
is based on the
understanding that different types of assets do not move in concert, and some are more volatile than others. A mix of assets provides balance and protects against risk.
Asset Allocation
involves spreading the risk
and reward of individual securities within
an asset class, or between asset classes.
Diversification
refers to the process of
dividing your investment
portfolio among different
asset classes, such as
stocks, bonds, and cash
equivalents, based on your
investment goals, risk
tolerance, and time
horizon.
Asset allocation
is the practice of spreading your
investments across different
securities within each asset
class to reduce risk
Diversification
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In other words, asset allocation is
about deciding how much of your
portfolio should be invested in each
asset class, while diversification is
about selecting a mix of securities
within each asset class to minimize
risk.
is used to return a portfolio
to its original target allocation at regular
intervals, usually annually.
Rebalancing
A potentially material aspect of
portfolio management relates to how
your portfolio is shaped to minimize
taxes in the long-term. This pertains
to how different retirement accounts
are used, how long securities are held
on for, and which securities are held.
Tax Efficiency
prioritizes
maximizing the potential earnings of the portfolio.
Often invested in riskier industries or unproven
alternative assets, an investor may not care about
losses. Instead, the investor is looking for the
“home run” investment by striking it big with a
single investment.
aggressive portfolio
relates to capital preservation. Extremely
risk-adverse investors may adopt a portfolio
management strategy that minimizes growth but
also minimizes the risk of losses.
Conservative:
would simply blend an aggressive and
conservative approach. In an attempt to get
the best of both worlds, a moderate portfolio still
invests heavily in equities but also diversifies and
may be more selective in what those equities are.
moderate portfolio management
strategy
Often a consideration for
older investors, some folks who do not have income may rely on their portfolio to generate income that can be used to live off of.
Income-Oriented:
investors may
be inclined to focus primarily on minimizing taxes,
even at the expense of higher returns.
Tax-Efficient:
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Portfolio Management:
CHALLENGES
investment portfolios are subject to market
fluctuations and volatility which can be
unpredictable, even the best management
approach can lead to significant losses.
individual investor’s risk tolerance
investors must be mindful of how some
strategies limit investment liquidity or
flexibility
should an investor turn to a portfolio manager
to manage their investments, this will incur a
management fee.
meets with a client
one-on-one to get a detailed picture of the person’s current financial situation, long-term goals, and tolerance for risk.
takes responsibility for monitoring
the assets and making changes to the portfolio as needed, with the approval of the client.
Portfolio Manager
TAKE NOTE
If all priority expenditures have been satisfied, the portfolio manager has greater freedom to pursue a more aggressive policy.
The portfolio objectives can be determined by ascertaining the constraints on portfolio. The greater the number of constraints and the more binding these constraints, more
conservative the portfolio must be.
is a basket of assets that
typically include stocks, bonds, cash, real estate and
more.
Investment Portfolio-
generally aim for a return by diversifying
these securities in a way that reflects their risk tolerance and financial goals.
Investors
Those investment that shoot for the highest possible return, are most appropriate for
investors who, for the sake of this potential high return, have a high risk tolerance and a longer time horizon.
may incorporate mutual
fund that aim for high capital gain, equities,
stocks, bonds, cash an maybe some commodities.
perform better in
long-term-about five years or longer.
Aggressive Investment Portfolio
This investment is meant for individuals with a longer time horizon and an average risk
tolerance.
Balanced or Moderate Investment Portfolio
primary investment objective is
to seek long-term capital appreciation
and also the Moderate Portfolio seeks current income.
The Moderate Portfolio’s
The portfolio would consist of
approximately:
Equities – 50 to 55%
Bonds- 35 to 40%
Cash and Equivalents- 5 to 10%
are debt instruments that pay a fixed amount
of interest, in the form of coupon payments, to investors.
Fixed-Income securities
money invested in a company by purchasing shares such as
Common stock, Preferred stock, Additional paid-in capital, Treasury
stock,
Equities
any short-term investment with a maturity of 90 days
or less such as banker’s acceptance, commercial paper or money market
Cash Equivalents-
which put safety at a higher priority, are most appropriate for investors who are risk averse and have a shorter time
horizon.
It will generally consist of cash and cash equivalents, or high quality fixed-income instruments.
The main goal is to maintain the real value of the portfolio, or to protect the value of the portfolio
against inflation.
Conservative Investment Portfolio
It is composed mainly of:
Fixed Income Securities- 70 to
75%
Equities 15 to 20%
Cash and equivalents- 5 to 15%
