Senator Mark Villar, principal author and sponsor of the Maharlika Investment Fund (MIF) Bill says that a possible 8.64 percent return on equity every year can be generated by the MIF.
“Based on studies and some projections, especially in terms of diversification of funds we saw that on average, the MIF may possibly gain 8.64 percent return on equity every year in the next ten years,” Villar said
According to Sen. Villar, the objectives of MIF is to optimize financial returns for the country and accelerate infrastructure development.
“In order to achieve the goals of the MIF, they must diversify the investments. So in line with the objectives, the MIC is envisioned to maintain two major sub-funds; Capital Market Investment Sub-fund and Sectoral Investment Sub-fund” Villar said
The Capital Market Investment Sub-fund will prioritize the generation of returns from investments in a diversified portfolio of liquid assets while on the other hand, the Sectoral Investment Sub-fund will engage in high-return projects that are relevant to the country’s development.
“The Capital Market Investment Sub-fund may consider developed market equities, nominal bonds, emerging market equities, real estate, private equity infrastructure, natural resources, and money market as investment vehicles. For Sectoral Investment Sub-fund, investment sectors to be considered include power, real estate, infrastructure, and logistics,” Villar explained.
Based on the proposal of the Bureau of Treasury, a return on equity may range between 6.51 percent to 10.78 percent, depending on the blend of placements between the two sub-funds.
“Depending on the blend of placements, we can see a high return on equity. But to be safe and keeping in mind the risks that comes with it, the MIF may be able to get an 8.64 percent return on equity provided placements between the two funds are equally shared. This could grow the seed fund up to P229 billion by 2023” Villar explained.
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