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SEC Issues Rules on Umbrella Funds

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On 8 April 2026, the Securities and Exchange Commission (SEC), issued SEC Memorandum No. 14 series of 2026 on the Rules on Umbrella Funds. The rules shall apply to all newly formed or existing open-end unit-issuing investment companies which consist of, or is to consist of, two or more sub-funds with segregated assets and liabilities. Under the Rules, an umbrella fund is defined as a registered open-end investment company whose articles of incorporation (AOI) and Prospectus provide that it consists of, or is to consist of two or more sub-funds where each sub-fund may pursue similar and/or different investment objectives, policies, strategies, terms, currency, minimum investment amount, fees/charges, among others.

 

The Rules include requirements for a unit-issuing investment company adopting an umbrella fund structure to include the words “Unitized Umbrella Fund” in its name and the following information to be included in the AOI of an umbrella fund:

 

  • That it is an open-end investment company structured as a unitized umbrella fund with segregated assets and liabilities between the sub-funds;
  • That is consists of, or is to consists of, two or more sub-funds;
  • That the assets of a sub-fund shall belong exclusively to the same sub-fund and shall not be used to discharge directly or indirectly the liabilities of, or claims against, any other person or body, including the umbrella fund, or any other sub-fund, except as otherwise provided in the Rules;
  • That any liability or cost incurred on behalf of, or attributable to, a sub-fund may only be discharged out of the assets of the same sub-fund;
  • That upon issuance of units by a particular sub-fund, the rights attaching to said security in respect of the assets shall be limited to those pertaining to the said sub-fund
  • A description of the rights of unitholders that are applicable to all sub-funds; and
  • The subscribed and paid-up capital of the umbrella fund which shall in no case be less than One Hundred Million Pesos (Php 100,000,000.00).

 

The by-laws of an umbrella fund must also contain the following:

 

  • The power of the Board of Directors to create, set-up, and launch new sub-funds with allocated units not exceeding the total number of units approved by the SEC; and
  • The power of the Board of Directors to re-allocate the units within an umbrella fund, subject to the conditions provided under these rules.

 

The Rules also provide for how a stand-along existing investment company may be converted to an umbrella fund, licensing requirements, the required information under the main prospectus of the umbrella fund, sub-fund requirements and prohibitions and guidelines for the amendments of offering documents, among others.

 

The full issuance may be accessed here.

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