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here's an article I read in the Inquirer about mutual funds. i hope this can be of help to anyone looking for a way to invest their money. :)

 

Discover mutual funds as savings tool

Romulo I. Neri

 

THE BEST investment decisions are made with the best use of available information.

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In the Philippines however, since there is a dearth of information on where people can invest, most Filipinos still keep their extra funds in savings account that earn them three percent per annum. The yield on time deposits, which at longer maturities can offer around 8 to 10 percent at best, is not an attractive option either.

 

Not too many know that a good alternative to a savings account is investing in mutual funds. For as low as P5,000 one can invest in a mutual fund, which by far is one of the best investments ever created since 1924 by three Boston securities executives that decided to pool their money together. The beauty of investing in mutual funds rests on its convenience and cost efficiency. Although mutual funds do not offer a guaranteed yield, historically, they are known to provide an average of return that is higher than what savings account or time deposits offer.

 

What is a mutual fund

 

A mutual fund is simply a pool of funds invested in stocks or bonds with a predetermined investment of objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities (usually stocks or bonds). Hence, one need not study each and every stock to buy and capitalize on the financial expertise and track record that the fund manager offers.

 

Of course, the biggest advantage to mutual funds is diversification, which is its ability to put one's investments into several instruments of varying risk and return profiles.

 

In fact, diversification is not limited to buying multiple stocks alone, but after buying different kind of stocks, you can add on bonds, then international bonds, and the list goes on at varying levels of financial sophistication. This is something that a small investor cannot do on his own, or perhaps will consume weeks and months for a big investor to do, but can be done instantaneously with a mutual fund since they automatically diversify in a predetermined category of investments that the financial manager intently and periodically analyzes. After all, the saying "don't put your eggs in one basket" is a tried and tested adage that investors, big or small, should take to heart.

 

In terms of liquidity, mutual funds also offer an easy exit since in the event that the investor needs his money, mutual fund companies allow the investor to pull out his investments, and redeem his shares at the prevailing net asset value per share or NAV.

 

Mutual funds are usually classified into:

 

1) a stock fund or a mutual find purely invested in equities

 

2) a balanced funds which is a mix of both stock and fixed-income placements; and

 

3) a bond fund which is purely invested in government securities. In the Philippines, because of the conservative nature of investors, mutual funds are predominantly placed in bond funds (94 percent) an only 2 percent of the assets are in stock or equity fund, based on the most recent 1994 data. Balanced funds corner around 4 percent of the market.

 

The mutual funds industry in the Philippines can still be considered miniscule. As of 2004, the industry's net assets stood at P52.95 billion, with reportedly some 25 funds in existence. Contrast this with over 10,000 mutual funds in the US today totaling around $7 trillion (with approximately 83 million individual investors). Despite the fact that the $7 trillion (With approximately 83 million individual investors).

 

Despite the fact that the local mutual funds industry traces its roots from as far back as the 1950's, there are really only three major players in the industry: the BPI Management and Trust Group, Philam only three major Asset Management Inc. and Sunlife Asset Management Inc. The largest fund in the industry is still the Ayala Life Fixed Income Fund with a P21.715 billion and Philam Bond Fund at the third place with P7.814 billion. At the fourth place is Sun Life Bond Fund with P4.609 billion industry share. The Ayala Life's Dollar Bond Fund came in next with P2.295 billion fund size. As of December 2002, it was estimated that mutual funds are only a 2 percent of the amount invested in savings and time deposits. Needless to say, with this volume. the mutual funds sector has an insignificant contribution to stock market.

 

Financial education is key to further growth of the mutual funds industry in the Philippines. On the one hand, it is true that there are industry issues that the players are grappling with and are still trying to resolve. Among these include the mutual fund's strong resemblance to the Common Trust Funds (and now the Unit Investment Trust Fund (UITFs) and while faced with strong competition from these alternative instruments, mutual funds are subject to more taxes which is a disincentive to investors. The lack of strong regulation is another unresolved issue. However, while industry players are working on leveling the playing field among them, active work should also be done to increase awareness among the investing public on the benefits of mutual funds as an alternative savings instrument.

 

At present, it is the investment agents that play the main role of disseminating information on mutual funds but these agents are attracted to push more the insurance and pre-need products that give them more commissions. One good way to disseminate information is to educate potential clients by way of seminars and forums held in offices/workplaces or other organized public venues.

 

While published literature on mutual funds abound, nothing beats a personal explanation of its features by experts themselves. For instance, determination of the Net Asset Value (NAV), which is key to monitoring the value of one's investment, may be unknown to a detailed document distributed to clients and potential savers that contains all the information that should be disclosed to an investor, can better serve the user if explained point by point in a laymanized version.

 

The thrust of educating small savers and equipping them with more information that can enable them to come up with better investment decisions can be shared responsibility between the players and the policymakers.

 

The advancement of the mutual funds industry in the country will benefit both the individual saver and the economy at large, which gains from a much improved system of mobilizing savings.

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The major newspaper (definitely businessworld) have a listing of mutual funds. they are segregated as to their kind ( I think ), Bond fund, equity fund, balanced fund, etc. Decide first what your risk appetite is. A bond fund is perhaps the most secure, it is like making a time deposit in the bank or buying government securities. The only question is what kind of earnings or interest the bond fund will make.

In the case of an equity fund, the money is invested in the stock market and so this comes with the prospect of better return and higher risk.

 

The whole concept of a mutual fund is that it pools together the funds of the investors. That way it has the size to get better rate or better deal and execution and advise. There is a fund manager who decides what and where to invest. ( Actually there is a management company where there is someone acting as fund manager.)

 

There are very rep*table names that manages these funds, so you can choose.

 

It can be helpful to also look at their track record. ie how the fund has performed compared to their peers over the last year, the last three years etc.

 

Hope that helps

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  • 3 weeks later...

check www.philamfunds.com by Philam Life. I opened mine from only 10K. their minimum is P5k actually.

 

Also try to get Francisco Colayco's book, Pera Mo Palaguin mo. it's very good. Other foreign authors are good also like Suze Orman. Before you open a mutual fund, just like what the authors say, decide on your financial goals. Like it's not necessary for an insurance if you don't have any family to leave behind. he heheh.

 

Salaried individauls and OFWs should learn to access these facilities traditionally reserved for the rich! Kudos to these writers!

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check www.philamfunds.com by Philam Life. I opened mine from only 10K. their minimum is P5k actually.

 

Also try to get Francisco Colayco's book, Pera Mo Palaguin mo. it's very good. Other foreign authors are good also like Suze Orman. Before you open a mutual fund, just like what the authors say, decide on your financial goals. Like it's not necessary for an insurance if you don't have any family to leave behind. he heheh.

 

Salaried individauls and OFWs should learn to access these facilities traditionally reserved for the rich! Kudos to these writers!

 

keep us updated with your experience in this investing tool. thanks. :)

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anyone already earning from this? what is the minimum monthly interest do you get from this?

 

kasi i know some online mutual funds na you can earn an average of 20% a month, so i guess mas ok dito kasi tingin ko sa mga mutual funds dito sa pinas mga less than 10% a month lang yung average na interest. nde ko lang sure.

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Guest VO2_Max
anyone already earning from this? what is the minimum monthly interest do you get from this?

 

kasi i know some online mutual funds na you can earn an average of 20% a month, so i guess mas ok dito kasi tingin ko sa mga mutual funds dito sa pinas mga less than 10% a month lang yung average na interest. nde ko lang sure.

 

20% a month? maybe 20% a year....if a month yan stay away from it...pangloloko yan

 

 

I have invested in 3 types na funds:

 

one sa Bond Fund (this earned me about 8%+/yr...time deposit is about 6%(less 20% with holding tax)

 

one sa Mixed(Bond and Equity) (this earned me about 23%/year) the return is base on before the gloriagate scandal

 

the last one sa equity: (b4 the scandal i was earning about 28%/year)....

 

have never checked how much i have loss so far pero am pretty sure i am still ahead.

 

Analyst was expecting a bull run sana this year....but the opposition derailed it.....am hoping that we could recover from all this scandal so i can recover may paper loss.....

 

Philequity is a good fund it exactly follows the movement of the PHISIX.....it might be a good time to invest in one right now

 

other fund managers: sunlife, Philam...both of this have dollar deonminated bonds too....my dollar bonds earned me about 5% tax free for last year.....time deposit should be around 2% (less 7.5% with holding tax)

 

 

One more thing: If you decide to put your money in a mutual fund make sure your horizon is on the long term basis......specially if you invest in an equity mutual fund.....and if you are investing in an equity na fund....make sure you are ready to lose that money

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20% a month? maybe 20% a year....if a month yan stay away from it...pangloloko yan

I have invested in 3 types na funds:

 

one sa Bond Fund (this earned me about 8%+/yr...time deposit is about 6%(less 20% with holding tax)

 

one sa Mixed(Bond and Equity) (this earned me about 23%/year) the return is base on before the gloriagate scandal

 

the last one sa equity: (b4 the scandal i was earning about 28%/year)....

 

have never checked how much i have loss so far pero am pretty sure i am still ahead.

 

Analyst was expecting a bull run sana this year....but the opposition derailed it.....am hoping that we could recover from all this scandal so i can recover may paper loss.....

 

Philequity is a good fund it exactly follows the movement of the PHISIX.....it might be a good time to invest in one right now

 

other fund managers: sunlife, Philam...both of this have dollar deonminated bonds too....my dollar bonds earned me about 5% tax free for last year.....time deposit should be around 2% (less 7.5% with holding tax)

One more thing: If you decide to put your money in a mutual fund make sure your horizon is on the long term basis......specially if you invest in an equity mutual fund.....and if you are investing in an equity na fund....make sure you are ready to lose that money

 

why is it good to invest in mutual funds while the market is on a down trend?

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20% a month? maybe 20% a year....if a month yan stay away from it...pangloloko yan

 

yes, that's 20% a month. its true. i can even show you how to earn 1% a day (30-31% a month), but i dont want to discuss it here for it isnt about mutual funds. just pm me na lang. thanks.

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anyone already earning from this? what is the minimum monthly interest do you get from this?

 

kasi i know some online mutual funds na you can earn an average of 20% a month, so i guess mas ok dito kasi tingin ko sa mga mutual funds dito sa pinas mga less than 10% a month lang yung average na interest. nde ko lang sure.

 

 

medyo super ganda nang deal niyan... but very dangerous... ala networking nanaman

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here guys are some info about philam bond fund:

 

1. You can deposit as low as P 5,000.00 to Millions of pesos.....

2. You're money will earn at a conservative projected rate of 8% per annum

and just like the Banks, they are NOT GUARANTEED

3. There is no maturity like time deposits, you can withdraw your money

anytime you want , but suggest you let it stay for 1 year to see better your

earnings and growth

4. Not subject to 7.5% widthholding tax, and bank charges like Time Deposits

5. Very Legal(Mandated by SEC,Central Bank,Dept. of Finance)

6. Safe- coz its Invested purely on ROP Bonds(Republic of tPhilippines) which is guaranteed by the sovereign State....

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here guys are some info about philam bond fund:

 

      1.  You can deposit as low as P 5,000.00 to Millions of pesos.....

      2.  You're money will earn at a conservative projected rate of 8% per annum

          and just like the Banks, they are NOT GUARANTEED

      3.  There is no maturity like time deposits, you can withdraw your money

          anytime you want , but suggest you let it stay for 1 year to see better your

          earnings and growth

      4.  Not subject to 7.5% widthholding tax, and bank charges like Time Deposits

      5.  Very Legal(Mandated by SEC,Central Bank,Dept. of Finance)

      6.  Safe- coz its Invested purely on ROP Bonds(Republic of tPhilippines) which is guaranteed by the sovereign State....

 

 

i think it also as the ayala fund which i have.... sa bpi meron rin doon

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Guest VO2_Max
why is it good to invest in mutual funds while the market is on a down trend?

 

once the events happening sbusides people will start to go back to the market....market is up by a few points na...and i think it is up again today...mga 1900+ plus na ata......when i said its at the best time because it was at the bottome na....it went down fast expectedly it is goin up fast....pero once another turmoi comes out....down na naman.......just think if the opposition new when the turmoil will happen and when it will subside......daming yumanman na politko in the past few days.....heck if i new that gloriagate scandal ahead of time.....easily i could have earned 200,000 in less than a month.....

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Ingat ka lang BOrederat, malamang massaged yung numbers na nakita mo dun. @ 20% per month ~ 240% per year? Sigurado volatile yung mutual fund na yan, pero kung ok yan sa risk tolerance mo, goodluck!

 

it isnt a mutual fund. if you've heard about auto-surf programs, thats what im referring to. i know some trusted and reliable auto-surf programs that are able to pay 1% a day for 365 days. yes, its true, 1% a day. the 8%+ interest of a mutual fund, can be earned in just 8 days in an auto-surf program. but of course, a little risk is involved here. pero di ba maraming investors take the risk kaya yumayaman sila?

 

i was once become interested in mutual funds pero when i found out about auto-surf programs that can give me huge returns than mutual funds eh dun ko na lang nilagay pera ko, mas madali pa kong yayaman lol.

 

im a member of this forum ng mga pinoys that talks about online investing, there you can read a lot of testimonials about it. it is really hard to digest when you hear something like i earn 1% per day, bla bla. pero programs that are too good to be true are sometimes too good and true. pm me na lang for the pinoy forum url.

 

but if you dont want to take the risk eh mutual fund is for you. your money is safe with mutual funds. is it? :)

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Guest VO2_Max
it isnt a mutual fund. if you've heard about auto-surf programs, thats what im referring to. i know some trusted and reliable auto-surf programs that are able to pay 1% a day for 365 days. yes, its true, 1% a day. the 8%+ interest of a mutual fund, can be earned in just 8 days in an auto-surf program. but of course, a little risk is involved here. pero di ba maraming investors take the risk kaya yumayaman sila?

 

i was once become interested in mutual funds pero when i found out about auto-surf programs that can give me huge returns than mutual funds eh dun ko na lang nilagay pera ko, mas madali pa kong yayaman lol.

 

im a member of this forum ng mga pinoys that talks about online investing, there you can read a lot of testimonials about it. it is really hard to digest when you hear something like i earn 1% per day, bla bla. pero programs that are too good to be true are sometimes too good and true. pm me na lang for the pinoy forum url.

 

but if you dont want to take the risk eh mutual fund is for you. your money is safe with mutual funds. is it?  :)

 

 

wait a min. i thought you said 20%/month....ngayon 1% a day nanaman..which is which ba...wow galing ng investment mo ah little risk and high return.....baliktad ata sa wat i have learned over the years....Investors na yumaman do take risk but they take educated risk......is that 1%/day return tied up with the number of people you bring in? ......why don't you open a thread and post what the program is all about.....give us a chance to scrutinize it.....am pretty sure a lot of MTC people would be able to ask some intelligent question about ur said program....guys wat do u think?

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UITF Vis a Vis MUTUAL FUNDS

The Philippine’s full adoption of the IAS 39 or mark-to-market sometime on September 2006 shows the country’s commitment in aligning the operation of pooled funds with international best practices and standards. In line with this, the Bangko Sentral ng Pilipinas through the BSP Circular 447 dated September 3, 2004 created the Unit Investment Trust Fund (UITF) which is now being distributed by banks. The UITF is an open-ended fund that pools the investments of investors into a larger fund under professional management. The investors share in the gains or losses of the fund, proportionate to their respective participation in the pool. Likewise, the fund’s assets are strictly market-determined based on the daily mark-to-market valuation. Unlike other bank products, however, UITF is not covered with PDIC insurance since it is not a deposit product.

 

Indeed, this reform in the trust industry poses a challenge to the mutual fund industry as the UITF becomes a direct competitor of mutual funds, more so when mark-to-market gets fully implemented on the latter in September 2006. Although yields seem to be the be all and end all of investing, it is necessary also to learn the fundamental characteristics of the investment vehicles as they may also play an integral part in determining the profitability or staleness of the funds.

 

To start with, both UITF and mutual funds are investment vehicles in which various participants or investors invest their money in a pool of assets for the purpose of profitable returns. They share common benefits as follows:

 

1. Investors gain low cost access to the expertise of top fund managers. Normally, without these pooled funds, only high networth individuals or institutional investors can avail of such services.

 

2. Investors get to own a wide cross section of investment outlets for a minimal investment amount. These funds effectively diversify portfolio allowing investors to maximize their earning potential.

 

3. Investors get a wholesale pricing for a retail investment. Through the pooled funds, they may enjoy a higher investment return as against an individual investor since the pooled investible funds are higher in monetary value.

 

While they share common benefits, the two funds differ in the legal /regulatory context.

 

1. The UITF is created by virtue of a Declaration of Trust executed by a bank with a trust license. Its fund management and operations are supervised by the Bangko Sentral ng Pilipinas (BSP). The UITF clients get participating units of investment for their placements. On the other hand, a mutual fund has a corporate existence. It is a legal entity that makes investments on behalf of their shareholders and is regulated by the Securities and Exchange Commission. Clients of a mutual fund effectively invest in shares of stocks of the fund.

 

2. A mutual fund charges entry and exit fees should the client redeem his shares from the fund within the prescribed holding period whereas UITF charges a fixed trust fee per annum to its investors and an early withdrawal fee.

 

MUTUAL FUNDS ADVANTAGE OVER UITF

 

While UITFs may have some distinct features, the following are advantages of mutual funds over UITFs that make them still the best options for both the retail and institutional investors.

 

1. Diversification – While both structures are highly diversified, the banks will probably sell the products to their existing depositors. In this regard, the depositors will be better off diversifying their exposures to the mutual funds that are not products of their own banks. In this way, their short term money remains with their bankers while their long term savings are not exposed to the same entity. Remember that UITFs are merely bank products and therefore, investing in the UITF offered by the same bank holding their deposits will be like putting their eggs in one basket so to speak.

 

2. Track record – UITFs are new vehicles and do not have a track record or performance to speak off. Banks will probably refer to their old CTFs’ performance but these are highly unregulated products that offer direct loans and therefore are not comparable to UITFs that cannot do direct lending. Furthermore, the UITFs are valued MTM while the CTFs were mostly valued on accrual basis.

 

3. Transparency – Mutual funds, being corporate structures are very transparent in terms of their investment portfolio. UITFs, being bank products do not need to be as transparent. In fact, there have been many incidents in the past where bank clients complain because the CTFs were given bonds that defaulted. These were bonds that were suspected to be originally in the books of the banks.

 

4. Voting rights – Mutual fund shareholders have the right to replace their fund managers if the latter performed poorly for the shareholders. UITF unit holders, on the other hand cannot replace the bank that owns the product in the first place.

 

5. Independent Directors – Mutual funds have their own set of board of directors whose concerns are mainly that of the fund and not the fund manager. The banks’ directors, on the other hand, will always prioritize the bank. UITF do not have a board of directors to safeguard the unit holders’ interest.

 

6. Valuation – For now our biggest advantage is the fact that we are still on accrual basis (the bond funds) while all UITFs are valued marked-to-market already. This may offer the investors enough breathing ground especially to bond fund investors who have adverse outlook on mark-to-market.

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