Mutual Funds

[bRIX]

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.

[WayneTruce]

I'm interested on this topic. How can I engage on Mutual Funds?

[bRIX]

you can try companies like Sunlife (http://www.sunlife.com.ph) and read

for more infos on how to start investing.

[Curious]

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

[bRIX]

thanks for the input mr. Curious.

[maniladirect]

Hey! A very timely topic! I just finished reading Andrew Tobias - Money Angles. I'll definitely be keeping an eye on this thread. I really dont know why people still use the Banking System when they can make more money in some other types of Biz.

[xuaeenr]

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!

[bRIX]

another fund i'm studying now is the Philequity Fund. anyone here who have tried this?

[bRIX]

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!

<{POST_SNAPBACK}>

 

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

[b0redrat]

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.

[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.

<{POST_SNAPBACK}>

 

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

[bRIX]

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

<{POST_SNAPBACK}>

 

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

[b0redrat]

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.

[Ankiseth]

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!

[bRIX]

yeah... looks too good to be true.. mahirap na pumasok sa ganyan.