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COMMENTARY FOR INFINITY PESO UNIT INVESTMENT TRUST FUND (UITF)
The Peso trust Maximizer posted an absolute year-to-date return of 6.6423% and year-on-year return of -.0106%, net of taxes and fees while the Infinity Peso Long Term Bond Fund had an absolute return of -.0091% since its inception date as of end of the second quarter of 2008.
The domestic bond market was distressed by the sustained rise in food and energy prices prompting the government to approve petition for wage hike by May. The 9-year high deadline and core inflation in May (9.6% and 6.2%, respectively) directed the Monetary Board to respond by rising key rates and Special Deposit Accounts by 25 basis points on June 5.
The first half of the year was all about global concerns of fighting inflation amidst declining economic growth. As oil prices soar from $87 per barrel low in January to $140 per barrel by end of June, the annual growth target was revised downwards, inflation revised upwards and the programmed balanced budget target was abandoned to 2010 with increased borrowing requirement to fund an estimated deficit of Php75B. The mounting negative developments and the bleak economic outlook ended the second quarter fixing yields up by an average of 200 basis points compared to March levels and near 300 basis points up versus January levels.
The Peso Trust Maximizer and Infinity Peso Long Term Bond Fund will continue to be invested in short duration with the ongoing concern on inflation brought about the continuous acceleration of prices in oil, commodity and food prices.
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