The basic definition and purpose why we invest is because we want to generate income or profit. And because people differ in personality, decision-making strategies, and priorities, there are different types of investments too. Some of us invest on education, insurance, retirement, commodities, properties, stocks or mutual funds, just so we can achieve our varied financial goals.
As a beginner, it is vital to research and seek professional advice from experts especially when it comes to investment. Let’s say, you have an extra from your 13th-month pay and you plan to invest to ladder up on your financial status. Would you consider investing in a mutual fund?
What is a Mutual Fund?
A mutual fund is a pool of money from different investors and is invested by fund managers to stocks, bonds, money market instruments, and other assets.
PIFA defines mutual fund as:
“A Mutual Fund is an investment company that pools the funds of many individual and institutional investors to form a massive asset base. The assets are then entrusted to a full-time professional fund manager who develops and maintains a diversified portfolio of security investments. People who buy shares of a mutual fund are its owners or shareholders. Their purchases provide the money for a mutual fund to buy securities such as stocks and bonds. A mutual can make money from its securities investments in two ways: a security can pay dividends and interest to the fund, or a security can rise in value. The fund passes any dividends, interest or profits on the sale of its portfolio securities, less fund expenses, to shareholders in the form of distributions.”
What are the types of mutual funds in the Philippines?
There are a couple of things that you have to consider before choosing a mutual fund. It would be best if you will link it to your individual circumstances especially your financial objective(s), risk tolerance, and time-frame.
At present, there are four basic types of mutual funds in the Philippines. They are:
Stocks (also known as Equity)
Equity funds is perfect for investors who want a long-term investment. It is fit for those who want to maximize returns and is readily aware of its equivalent level of high risk. Equity funds are used to invest in stocks of different companies to earn profit.
Balanced Funds
If you are into medium to long-term investment with a mix of bonds, stocks and other securities in a single portfolio, plus a tolerance of low to moderate risk, you may consider balanced funds.
Also known as hybrid funds, investment comes in various mutual fund types.
Bonds
Bond funds aim for stability and growth, and is for investors who prefer minimal risk. Bond funds is an investment in form of debts. They earn through the interests. They require a minimum investment thus is less risky.
Compared to time deposits and money market investment, this may grant better profits.
Money Market Funds
Money Market Funds is for investors who aim on short-term investments with least risk, even of low returns. Funds are invested in certificates of deposits, treasuries, corporate bonds and other securities.
Examples of Mutual Funds in the Philippines
| Fund Name | NAVPS | 1 Year Returns | 3 Year Returns* | 5 Year Returns* | YTD Returns |
| ATRAM Alpha Opportunity Fund, Inc. | 1.3102 | -7.03% | -5.78% | 1.72% | -5.2% |
| ATRAM Corporate Bond Fund, Inc. | 1.8976 | -0.04% | 0.13% | 0.04% | -0.23% |
| ATRAM Philippine Balanced Fund, Inc. | 2.2795 | 3.55% | -1.59% | 1.31% | 4.51% |
| ATRAM Philippine Equity Opportunity Fund | 3.1542 | -15.04% | -10.4% | -3.02% | -14.25% |
| ATRAM Total Return Dollar Bond Fund, Inc. | $1.2715 | 5.51% | 3.88% | 3.02% | 5.33% |
| Soldivo Bond Fund | 1.0362 | 8.42% | 3.98% | 2.57% | 7.46% |
| Soldivo Strategic Growth Fund | 0.7269 | -15.51% | -7.76% | -3.27% | -14.62% |
| Fund Name | NAVPS | 1 Year Returns | 3 Year Returns* | 5 Year Returns* | YTD Returns |
| Sun Life Prosperity Philippine Equity Fund, Inc. | 3.6131 | -14.18% | -6.22% | -1.08% | -14.16% |
| Sun Life Prosperity Philippine Stock Index Fund, Inc. | 0.9173 | -8.1% | -4.09% | 0.62% | -8.34% |
| Sun Life Prosperity World Voyager Fund, Inc. | $1.632 | 21.93% | 9.61% | n.a. | 18.37% |
| Sun Life of Canada Prosperity Balanced Fund, Inc. | 3.5648 | -7.44% | -2.78% | -0.07% | -7.73% |
| Sun Life Prosperity Achiever Fund 2028, Inc. | 1.0194 | 0.85% | n.a. | n.a. | 0.36% |
| Sun Life Prosperity Achiever Fund 2038, Inc. | 0.9515 | -4.06% | n.a. | n.a. | -4.51% |
| Sun Life Prosperity Achiever Fund 2048, Inc. | 0.9349 | -5.48% | n.a. | n.a. | -5.87% |
| Sun Life Prosperity Dynamic Fund, Inc. | 0.8853 | -9.02% | -3.63% | -0.88% | -9.18% |
| Sun Life of Canada Prosperity Bond Fund, Inc. | 3.188 | 4.62% | 4.67% | 3.57% | 3.65% |
| Sun Life Prosperity GS Fund, Inc. | 1.743 | 3.42% | 3.97% | 2.87% | 2.46% |
| Sun Life Prosperity Money Market Fund, Inc. | 1.2949 | 2.61% | 2.99% | 2.62% | 2.36% |
| Sun Life Prosperity Dollar Starter Fund, Inc. | $1.0517 | 1.51% | 1.73% | n.a. | 1.29% |
| Fund Name | NAVPS | 1 Year Returns | 3 Year Returns* | 5 Year Returns* | YTD Returns |
| Philequity Alpha One Fund, Inc. | 1.0827 | n.a. | n.a. | n.a. | 5.11% |
| Philequity Dividend Yield Fund, Inc. | 1.1627 | -9.69% | -4.81% | -0.18% | -9.65% |
| Philequity Fund, Inc. | 34.642 | -8.56% | -4.19% | 0.52% | -8.59% |
| Philequity MSCI Philippine Index Fund, Inc. | 0.9149 | -10% | n.a. | n.a. | -10.14% |
| Philequity PSE Index Fund Inc. | 4.7903 | -8.05% | -3.85% | 0.84% | -8.29% |
| Philequity Alpha One Fund, Inc. | 1.0827 | n.a. | n.a. | n.a. | 5.11% |
| Philequity Dividend Yield Fund, Inc. | 1.1627 | -9.69% | -4.81% | -0.18% | -9.65% |
| Philequity Fund, Inc. | 34.642 | -8.56% | -4.19% | 0.52% | -8.59% |
| Fund Name | NAVPS | 1 Year Returns | 3 Year Returns* | 5 Year Returns* | YTD Returns |
| PAMI Equity Index Fund, Inc. | PHP 46.8502 | -8.74% | -4.29% | 0.08% | -8.64% |
| Philam Managed Income Fund, Inc. | PHP 1.3167 | 5.25% | 4.40% | 2.58% | 4.77% |
| Philam Bond Fund, Inc. | PHP 4.6281 | 6.59% | 4.45% | 3.13% | 5.84% |
| Philam Dollar Bond Fund, Inc. | USD$ 2.5267 | 5.49% | 4.02% | 3.67% | 5.11% |
| PAMI Global Bond Fund, Inc. | USD$ 0.0000 | -100.00% | -100.00% | -100.00% | -100.00% |
| Philam Fund, Inc. | PHP 16.9099 | -0.17% | -0.18% | 1.18% | -0.30% |
| PAMI Horizon Fund, Inc. | PHP 3.7819 | -0.11% | -0.10% | 1.26% | -0.19% |
| PAMI Asia Balanced Fund, Inc. | USD$ 0.0000 | -100.00% | -100.00% | -100.00% | -100.00% |
| Philam Strategic Growth Fund, Inc. | PHP 489.4200 | -8.46% | -4.37% | -0.63% | -8.14% |
For a complete list, you can visit Philippine Investment Funds Association.
Steps before you invest in Mutual Funds
Determine your investing goals
First thing first, what is your financial goal? How much money are you willing to risk? What kind of investor are you? What is your risk tolerance?
Identifying the reason behind your decision to invest will allow you to narrow down options and choose the best that suits you.
Do your research
There are different mutual fund companies in the Philippines. Legit companies are controlled by the Security and Exchange Commission thus it is always safe to check with them just to make sure you are secured. This agency will protect investors against scams and illegal investments.
We can also visit the Philippine Investment Funds Association to find and compare company records based on their NAVPS (Net Asset Value Per Share).
Be open with your agent
A mutual fund agent is a requirement. You will not just compare and contrast companies, but you have to review the investing strategy of fund managers too.
You can address your queries in advance so the agent can help you, and recommend a mutual fund that suits your goals and personality. And make sure to check their licenses too!
Choose the mutual fund that is best for you
As previously mentioned, there are certain considerations that you must note before picking the right one. Your financial objective, risk tolerance and time-frame are key factors before your venture your hard-earned cash. Reading more about what each mutual fund can offer will surely be beneficial on your end.
Submit the necessary requirements
Ready a valid identification card together with your initial investment. Then, comply with the following forms:
- Order Ticket or Online Order Form which contains information on the type and number of shares you want to have
- Account Opening Form requires your personal details
- Investment Risk Profiling Questionnaire evaluates your financial objective and risk tolerance
Monitor your fund(s)
It doesn’t stop with the investment, you still have a part, and that is the monitoring of your fund. Update yourself with the status of your fund by talking with the fund manager on how you can regularly monitor the investment.
Keeping yourself up to date with the performance of your investment can set expectations in the meantime.
Final Thoughts
Investing in a Mutual Fund is a big decision to make as it requires risk, time and trust. As you venture on the investment, you must put in mind that there are chances of getting higher returns and maybe not, depending on the type of mutual fund you chose and market conditions.
It may also require more time to achieve expected outcome since this is a long-term investment. You must be willing to wait for your money to grow, even in a slow, steady pace.
And last, once you decide to participate on investing, you entrust your hard earned money to a professional which in turn will apply his skills to achieve best results.
All you have to do is fund it, and hope and wait for it to earn. If you are willing to do so, then this must be a sign. Give it a go! We are rooting for you.
