You have heard this before: if you only put your extra money in a savings account without it working for you, then you’re missing a lot.
With Mutual Funds as your investment, you can let your money work for you. But first, do research first and you should carefully define your goals, time horizon, risk appetite and other factors.
In the Philippines, even as low as P5,000 (or even P100), you can start access professionally-managed Mutual Funds, equities, bonds and other securities.
What is a Mutual Fund?
A Mutual Fund (MF) is a pooled fund where a professional fund manager places the collected money to an investment instrument with the goal of growing it.
The pooled funds are invested in different types of asset instruments listed below. The best thing with Mutual Funds is that even as low as P100, you can “ride” on the expertise of fund managers with years of experience as deep as 45 years (e.g. Mr. Sy of PhilEquity).
Types of Mutual Funds
There are different types of mutual funds that match the investor’s goals and profile. The types of mutual funds are primarily categorized based on 3 factors: Fund Instruments, Risk Profile, and Investment Horizon that should match a client’s financial goals.
1. Money Market Funds
2. Bond Funds
3. Balanced Funds
4. Equity Funds
5. Equity Index Funds
Below are factors that can help you choose which Mutual Fund is best for you.
|Type of Mutual Fund||Risk||Description||Recommended Time Horizon|
|Money Market Funds||Minimal or Conservative||The fund is lent to government or corporations. It also includes time deposits and special savings accounts.||Short-term (less than a year)|
|Bond Funds||Minimal or Conservative||The fund is usually grown by lending to government and corporate as debt.||Short to medium term (1-3 years)|
|Balanced Funds||Moderate||Combination of fixed income (lent to burrowers) and various companies in the index.||Medium term (3 – 5 years)|
|Equity Funds||Long-term Growth and High Risk||Investments are placed in companies listed in stocks exchange.||Long term (more than 5 years)|
|Equity Index Funds||Long-term Growth and High Risk||Replicates the performance of PSEi through blue-chip stocks.||Long term (more than 5 years)|
Pros and Cons of Mutual Funds
1. Time-saver. you don’t have to check your account everyday to see the stock performance. Someone manages it for you which results in…
2. Professional Management. More time for your own endeavors. Unless you are a trader yourself handling all those big amounts of money, you may want to entrust it to a person who has spent many years in growing funds.
3. Less Guilt or Regrets. If you manage your own stocks or funds, tendency is to blame yourself if your decision led to losses. Except that if you already have the Buffet-like skills in investing, you may always not regret your decisions.
4. Minimal Initial. MFs in COL Financial offer as low as PHP100 initial contribution and as low as P100 additional placements.
1. Not satisfied with the growth of the fund you have chosen. That’s why it is important to know your investment risk portfolio.
2. Can’t take the risk appetite of your MF manager and can’t afford to see those reds. Most probable reason is a mismatch: the MF you got was agressive, yourself is conservative.
3. Not happy with the charges. You may feel that paying management fees would have been better if you did the management yourself.
List of Mutual Funds in the Philippines
Caution: If it promises guaranteed profits, if it’s “risk-free” if the only way to earn is to recruit, if it’s never heard of before, it could be a scam. – SEC
- ALFM – Dollar, Euro, and Peso Bond Fund, INC.
- Atram Total Return Bond Fund, INC. and Corporate Bond Fund, INC.
- Cocolife Fixed Income Fund
- Ekklesia Mutual Fund Inc.
- First Metro Save & Learn Dollar Bond Fund, Inc. and Save and Fixed Income Fund
- Grepa Life Dollar Bond Fund Corp. and Fixed Income Fund Corp.
- PAMI Global Bond Fund
- Philam Bond and Dollar Bond
- PhilEquity Dollar Income Fund
- PhilEquity Peso Bond Fund
- Soldivo Bond Fund
- Sun Life Prosperity Dollar Abundance Fund
- Sun Life of Canada Prosperity Bond Fund
- Sun Life Prosperity GS Fund
- ALFM GROWTH FUND, INC
- ATRAM ALPHA OPPORTUNITY FUND, INC.
- ATRAM DYNAMIC ALLOCATION FUND, INC. (Formerly.
- OPTIMA BALANCE FUND, INC.)
- ATRAM PHILIPPINE BAI AND FUNDING
- BAHAY PARI SOLIDARITAS FUND, INC.
- COCOLIFE DOLLAR FUND BUILDER (USS Denominated)
- FIRST METRO SAVE AND LEARN BALANCED FUND, INC.
- GREPALIFE BALANCED FUND CORPORATION NCM MUTUAL FUND, INC
- ONE WEALTHY NATION FUND, INC
- PAMI ASIA BALANCED FUND, INC (USS Denominated)
- PAMI HORIZON FUND, INC. (FORMERLY GSIS MUTUAL FUND, INC.)
- PHILAM FUND, INC SUN LIFE
- PROSPERITY DOLLAR ADVANTAGE FUND, INC (US$ Denominated)
- SUN LIFE OF CANADA PROSPERITY BALANCED FUND, INC.
- SUN LIFE PROSPERITY DOLLAR WELLSPRING FUND INC.
- SUN LIFE PROSPERITY DYNAMIC FUND, INC
- SUN LIFE PROSPERITY ACHIEVER FÜND 2028, INC.
- SUN LIFE PROSPERITY ACHIEVER FUND 2038, INC
- SUN LIFE PROSPERITY ACHIEVER FUND 2048, INC
- ATRAM ASIAPLUS EQUITY FUND,INC.
- ATRAM PHILIPPINE EQUITY
- OPPORTUNITY FUND INC.
- CLIMBS SHARE CAPITAL EQUITY
- INVESTMENT FUND CORPORATION
- FIRST METRO PHILIPPINE CONSUMER
- FUND ON MSCI PHILIPPINE, INC
- FIRST METRO SAVE & LEARN ASIA FOCUS EQUITY FUND INC. (US$ Denominated)
- FIRST METRO SAVE AND LEARN EQUITY FUND INC.
- MBG EQUITY INVESTMENT FUND, INC.
- PAMI EQUITY INDEX FUND, INC.
- PHILAM STRATEGIC GROWTH FUND, INC
- PHILEQUITY FUND. INC.
- PHILEQUITY PSE INDEX FUND, INC
- PHILEQUITY STRATEGIC GROWTH FUND, INc.
- PHILIPPINE STOCK INDEX FUND, INC.
- SOLDIVO STRATEGIC GROWTH FUND, INC.
- SUN LIFE OF CANADA PROSPERITY
- PHILIPPINE EQUITY FUND, INC.
- SUN LIFE PROSPERITY PHILIPPINE STOCK INDEX FUND, INC.
- SUN LIFE PROSPERITY WORLD VOYAGER FUND INC
- UNITED FOND, INC.
- PHILEQUITY MSCI PHILIPPINES INDEX FUND, INC.
|Fund Name||Fund Type||COL Risk Rating|
|ATRAM Philippine Balanced Fund, Inc.||BALANCED FUND||5|
|Philam Fund||BALANCED FUND||5|
|PAMI Horizon Fund||BALANCED FUND||6|
|Sun Life Prosperity Balanced Fund||BALANCED FUND||6|
|First Metro Save and Learn Balanced Fund||BALANCED FUND||6|
|ALFM Peso Bond Fund||BOND FUND||3|
|First Metro Save and Learn Fixed Income Fund||BOND FUND||3|
|Philequity Peso Bond Fund||BOND FUND||4|
|Philam Bond Fund||BOND FUND||4|
|Sun Life Prosperity Bond Fund||BOND FUND||4|
|Sun Life Prosperity GS Fund||BOND FUND||4|
|Philequity MSCI Philippines Index Fund||EQUITY FUND||–|
|Philippine Stock Index Fund||EQUITY INDEX FUND||7|
|Philam Strategic Growth Fund||EQUITY FUND||7|
|Sun Life Prosperity Equity Fund||EQUITY FUND||7|
|First Metro Save and Learn Equity Fund||EQUITY FUND||7|
|Philequity Fund||EQUITY FUND||7|
|Philequity PSE Index Fund||EQUITY INDEX FUND||7|
|Philequity Dividend Yield Fund||EQUITY FUND||7|
|Sun Life Prosperity Philippine Stock Index Fund||EQUITY INDEX FUND||7|
|PAMI Equity Index Fund||EQUITY INDEX FUND||7|
|ATRAM Philippine Equity Opportunity Fund||EQUITY FUND||8|
|ATRAM Alpha Opportunity Fund, Inc.||EQUITY FUND||8|
|ALFM Growth Fund||EQUITY FUND||8|
|ALFM Money Market Fund||MONEY MARKET FUND||1|
|Sun Life Prosperity Money Market Fund||MONEY MARKET FUND||1|
|Philam Managed Income Fund||MONEY MARKET FUND||2|
|Legend for COL Risk Rating:
3-4 Moderately Conservative
5-6 Moderately Aggressive
Top Mutual Funds in the Philippines
The following list of top or best performing mutual funds were based on the most important categories that determine the ranking of the Mutual Fund instruments.
Categories to Measure in Determining the Best Mutual Fund
Top performing funds are based depending on a chosen metrics or category. The most useful categories are:
- Risk Profile: Aggressive, Balanced and Conservative.
- You should be able first to identify your risk appetite, or the rate of fluctations in your money, before you invest in MF.
- Time Horizon: Know how long you are comfortable placing your money in the fund. Determine the time that you’ll withdraw it so you know what metrics to look at, and if it’s in the scope of the fund’s holding period.
- 1-year performance
- 3-year performance
- 5-year performance
- Performance since inception
- Company profile: Knowing what company manages the profile, who’s the fund manager, his/their experience, historical track record and more.
Funds that are in the shorter time horizon may use the 1-year fund performance. Such funds include Money Market Funds and Bond Funds.
Other factors to consider are fund size, fund manager’s profile and destinations of the investment may also be considered.
Best Performing Funds of 2019
Bond funds were the best performing asset class in 2019 with an average return of 8.7% compared to stock index funds’ 4.9% and stock funds’ 1.0% average gain.
Source: COL Fund Source
Top Mutual Fund (Aggressive Category)
The Philequity Fund is suitable for investors with high risk tolerance and long-term investment horizon. The fund aims to provide investors with long-term capital appreciation by investing primarily in equity securities of listed Philippine companies.
Longest-running equity mutual fund in the country with a robust track record due to its effective stock-picking approach.
- Fund size has already ballooned though to P11.6B as of end-Oct making its performance more tied to the movement of the Philipine Stock Exchange Index (PSEi) over the recent periods.
- Stock selection is now more focused on index and large cap names so
investors can expect that the Philequity Fund will largely move in line
with and only have
Top Mutual Fund (Balanced Category)
The Sun Life Prosperity Balanced Fund is suitable for investors with moderate risk tolerance and long-term investment horizon. The fund aims to provide investors with income and capital growth by investing in a mix of debt and equity securities.
- One of the largest funds in the balanced fund category with a total asset size of P10.0B as of end-September.
- Currently targets an equal 50-50 split between equity and fixed income exposure, but bias and higher weight towards an asset class still an open possibility depending on the call of the chief investment officer
- Portfolio is largely a mix of the Sun Life Prosperity Equity Fund and the fixed income funds of Sun Life.
Top Mutual Fund (Conservative Category)
The Sun Life Prosperity Bond Fund is suitable for investors with low risk tolerance and medium-term investment horizon. The fund aims to provide investors with regular returns and principal preservation by investing in risk-free local government securities and high-quality corporate debt securities.
- Fixed income fund with investment universe consisting of cash instruments, government securities, corporate bonds, and corporate loans.
- Majority of the portfolio is invested in government securities but exposure to corporate bonds that provide higher interest rates may be as high as 30%
- Currently still focusing primarily on shorter-to-medium term fixed income securities (1 to 5yrs)