I started investing in mutual funds when I was 22 years old. As an Overseas Filipino Worker (OFW) then, I was fortunate to be able to save some money at that young age because of my work abroad.
One time while I was on vacation in the Philippines, I saw a large billboard in EDSA promoting a big mutual fund company in the Philippines. (I won’t name which one, but let’s just say there’s the word “life” in its name. Sunlife, Manulife, Pru Life? Take a guess!).
I got interested with their promise that a mutual fund is an investment that can help me “retire rich”. Back then, and even until now, I love the idea of retiring early and becoming financially free. I do not want to work for the rest of my life, so an opportunity to help me grow my money on the side made me decide to drop by the mutual fund’s office on that same day. At the office, I was told by the secretary to sit and wait for a mutual fund agent who will accommodate me. After a few minutes, a guy walked in, scouted the entire room then told the secretary:“Nasaan yung kliyente? Wala namang investor dito…” (I was the only one there besides the secretary.)
I stifled a laugh, unsure if I should be offended or amused. I got up, approached the guy, and introduced myself as a 22-year-old potential mutual fund investor. He blushingly apologized and we started talking about mutual funds and how this can be a good investment opportunity to help me reach my financial goals.
What are Mutual Funds?
A Mutual Fund is — bear with me with this boring textbook definition — “an investment fund that collectively pools money from individual and corporate investors, with the pooled money being managed by a professional fund manager who invests in stocks, bonds, money market instruments, or other securities with the goal of providing an acceptable level of return to contributing investors.”
Don’t get intimidated by this wordy definition. Simply put, a mutual fund gathers investments from various investors with the said fund intended to be managed by professional investment managers with the hopes of making money for all investors of the fund.
Mutual Funds in the Philippines are Registered Companies
How do mutual funds work? In the Philippines, mutual funds are registered as independent and stand-alone companies, which makes mutual fund investors the “owners” or “shareholders” of the fund.
In the same way that you become a part-owner of a publicly-listed company when you buy the stocks of, say, Jollibee Foods Corp. (JFC), Megaworld Corp. (MEG), or Ayala REIT Inc. (AREIT) in the Philippine Stock Exchange (PSE), you also become a shareholder of the mutual fund company when you decide to invest in it. The number of shares of mutual fund that you buy represents the number of shares of that mutual fund company that you own.
As shareholder of that mutual fund, of course, you make money when the price of the fund, computed by its Net Asset Value per Share or NAVPS, increases in value. A separate section below explains in detail how you can compute your mutual fund earnings using the NAVPS.
Mutual Funds vs. UITF
How are mutual funds different from other investments such as UITF?
Unit Investment Trust Funds or UITF are similar to mutual funds in the sense that they are also collective investment schemes where pooled funds are managed by an investment team that invests in a variety of investment securities.
However, while investors of mutual funds become shareholders of the mutual fund, investors of UITF do not become shareholders. Instead, UITF investors merely buy “units of participation.” As such, they do not become part-owners of the bank or trust corporation offering the UITF product. Investors merely receive a share in the profits or earnings of the UITF, which is measured by changes in its price called the Net Asset Value per Unit or NAVPU (versus NAVPS in mutual funds).
Mutual Funds vs. VUL
How about Variable Universal Life (VUL) insurance (also called Variable Unit-Linked insurance)? How are VUL different from Mutual Funds?
In contrast with a mutual fund, a VUL is a 2-in-1 product combining the features of an insurance and investment product, while a mutual fund is a purely investment product.
The VUL’s insurance component offers a “death benefit,” wherein beneficiaries receive a certain amount in case of the death of the planholder. This is because a portion of the VUL investment is used to pay the “insurance premium”. The remainder from the money invested by the VUL investor, after the insurance premium is deducted, is placed in investible assets and managed by fund managers similar to a Mutual Fund or UITF.
How Mutual Funds differ from VUL and UITF
Here’s a summary of the differences between the three products VUL, UITF, and Mutual Funds.
|Nature of the Product||Shares of ownership in a mutual fund company||Life insurance with investment component||Units of participation in an investment product|
|Owner / Fund Manager||Mutual Fund company||Insurance company||Bank or Trust Corporation|
|Agents / Seller Distributor||Licensed Agent (Certified Investment Solicitor)||Licensed Agent (Variable Life license)||Licensed Employee (Certified UITF Marketing Personnel)|
|Price||Net Asset Value per Share (NAVPS)||VUL Unit Price||Net Asset Value per Unit (NAVPU)|
|Fees||(1) Entry fee or sales load; (2) Exit fee; (3) Management fee||(1) Entry fee or sales load; (2) Exit fee; (3) Management fee; (4) Insurance charge; (5) Surrender charge; (6) Policy fee or Rider charge, if applicable||(1) Trust fee; (2) Early redemption fee, if applicable|
|Dividends||Yes, if declared and distributed to shareholders||None||None|
|Death Benefit||None||Yes, paid to beneficiaries||None|
|Regulatory Body||Securities and Exchange Commission (SEC)||Insurance Commission (IC)||Bangko Sentral ng Pilipinas (BSP)|
Summary of the Product. Mutual Funds are offered by investment companies registered with the Securities and Exchange Commission (SEC). Therefore, when you invest in a mutual fund, you’re actually buying shares of the mutual fund company which makes you a stockholder of the fund. You therefore acquire the rights of a regular stockholder, including right to vote and right to receive dividends, if distributed by the mutual fund.
UITF, on the other hand, is a trust product of banks or trust corporations. When you invest in UITF, you merely buy “units” of investment, not shares of a company. Therefore, you do not acquire shareholder rights in the issuer of the UITF. You do not get the right to vote, unlike in a mutual fund where you can vote on certain matters for approval by shareholders, but you will still receive your share in the earnings of the UITF.
VUL products, meanwhile, are a 2-in-1 “insurance plus investment” product offered by insurance companies. A portion of the investment is paid as insurance premium with the remainder invested and managed to increase the value of the fund.
Distribution or Sales Agents. To be able to sell shares of mutual funds, the agent (who is a third party personnel not employed by the mutual fund company) should have a “Certified Investment Solicitor (CIS)” license awarded by the SEC. To become a CIS, agents must pass a certification exam given by the SEC allowing them to sell mutual funds.
UITFs, on the other hand, are not sold by third-party agents but offered by full-time employees of the bank or trust corporation. There is an existing rule by the BSP that UITF sellers must have received the “Certified UITF Marketing Personnel” license. The rationale behind requiring this license is to “improve the quality of sales and marketing practices of UITF marketing staff,” according to the BSP. At present, though, this plan is still pending and its implementation has been deferred to 2023.
For VUL products, these are also sold by licensed third-party agents with a valid “Variable Life” license which they can acquire after passing a certification exam administered by the Insurance Commission (IC).
Owner and Fund Manager. Mutual Funds are marketed and offered by SEC-registered mutual fund companies, while VUL products are offered by companies primarily selling life insurance. UITF, meanwhile, are offered by banks or companies with a Trust license (i.e., Trust Corporation).
It’s possible for one company (or subsidiaries under a parent company) to offer multiple products. For example, the Bank of the Philippine Islands (BPI) may offer customers in a branch all three products although the products are separately handled by BPI’s independent subsidiaries: mutual funds are products offered by various BPI-owned companies under the “ALFM” brand, while the UITF are products of BPI Asset Management and Trust Corp. (BPI AMTC), and VULs are products of BPI AIA Life Assurance Corp. (BPI AIA), formerly called BPI-Philam Life Assurance Corp.
In mutual funds, money is entrusted to a group of professional fund managers appointed by the investment company. In UITFs, money is typically managed by the Trust Group (or Trust Department) of the bank or the Investment Management group in a Trust corporation. VULs are managed either by the in-house fund managers of the insurance company or a separate investment management company appointed by the insurance firm.
The competencies and certifications of Mutual Fund, UITF, and VUL fund managers are usually the same, but in terms of professional affiliation, they could be members of the Philippine Investment Funds Association (PIFA) or the Trust Officers Association of the Philippines (TOAP). It’s possible that fund managers are members of both, especially if their institution offers mutual funds, UITF, and VUL.
Price. The price of a Mutual Fund, UITF, or VUL is measured by its current Net Asset Value. The Net Asset Value (NAV) is simply the difference between the values of the total assets owned by the fund less its total liabilities. Simply speaking, the NAV is what’s left of all assets of the fund after all liabilities or financial obligations have been deducted. This NAV is then divided by the total number of MF, UITF, or VUL shares outstanding.
The resulting number, in the case of mutual funds, is called NAVPS or Net Asset Value per Share. For UITFs, the measure of performance is called NAVPU or Net Asset Value per Unit. To differentiate with NAVPS and NAVPU, VUL prices are simply called VUL Unit Prices. Sample computations of NAVPU, NAVPS, and Unit Prices are explained in a latter section of this article.
Fees. Mutual funds and VUL charge sales loads, which may be in the form of entry or exit fees. Entry fees are upfront sales load charged before the account is opened. Exit fees, also called redemption fees, are charged when shares are redeemed and converted to cash. What most investors don’t know is that entry and exit fees are actually the commissions paid to mutual funds or VUL agents. These sales loads could reach up to 5% of your investment amount, so take note how entry or exit fees can affect your investment.
UITFs do not have entry or exit fees, but some charge an early redemption fee if the investment is liquidated or withdrawn before the set minimum holding period.
All three charge a fixed management fee, which is a certain percentage of the total assets they manage (called “Assets Under Management” or AUM). This management fee, called Trust Fee in UITF, represents the income of the company for managing and handling the fund. In the Philippines, management fees charged by Mutual Funds, VUL, and UITF typically range from 0.5% to 2.0% of the AUM. This amount may be deducted from the fund’s assets every month or every quarter.
Applicable Law. A specific law in the Philippines called the “Investment Company Act of the Philippines” (Republic Act No. 2629) governs mutual fund companies. UITF and VUL are not governed by any specific law, but they are governed by rules and regulations set by the Bangko Sentral ng Pilipinas (BSP) for UITF and by the Insurance Commission (IC) for VUL products. A UITF, although offered by banks, is not a deposit product which means it is not insured and covered by the Philippine Deposit Insurance Corporation (PDIC) for up to P500,000. Mutual Funds and VUL are also not deposit products and thus not similarly covered by the PDIC.
Regulatory Body. Mutual funds are registered companies, therefore, they are regulated by the Securities and Exchange Commission (SEC) of the Philippines. UITFs, as a bank product, are regulated by the Bangko Sentral ng Pilipinas (BSP). VUL products, meanwhile, are regulated by the Insurance Commission (IC).
How to Choose the Best Mutual Funds
“OK, I’m ready to invest! How do I start investing in mutual funds?”
Hold your horses for now and continue reading to find out three (3) key considerations that you should assess before you put money in Mutual Funds. Make sure you think through these three things; otherwise, you might end up with unacceptable losses on your investment!
Without a doubt, returns or profits of the fund is one of the most important criteria when considering which mutual fund to invest in. But trust us when we say that this should not be your one and only criteria.
How to choose the best mutual fund for you? Take note of these three considerations:
- Long-term return (or consistent performance) of the fund;
- Investment style of the fund; and
- Match between investor profile and investment choice.
1. Long-Term Return (Consistent Performance) of the Fund
The fund performance, summarized by the rate of return, is no doubt a very important consideration. But don’t get easily blinded by a fund’s outstanding performance in the short run. Take note: historical performance is not a guarantee of future returns.
You should instead focus on consistent performance over the long run, that is, preferably 3-year or 5-year returns of the fund. You may check out the list of best performing mutual funds in our article Best Mutual Funds to Invest in the Philippines.
You should not choose funds with returns that are “flash in the pan” — meaning, a winning streak for a period of time but cannot be replicated or repeated over the long run. There’s no ideal rate of return that would make a fund the best of the best, but choose one that consistently outperforms its own benchmark return or its peers in its category.
Here’s our tip! In the case of equity mutual funds, choose funds that consistently beat the performance of the Philippine Stock Exchange index (PSEi).
For money market mutual funds, choose funds that beat the interest rates offered by Time Deposits in the Philippines with one-year maturity. For balanced funds and bond funds, each will have their own varying benchmark so check the fund prospectus or fund fact sheet to see if they’re outperforming their chosen benchmarks.
2. Investment Style of the Fund (Active vs. Passive Investing)
The performance of the fund is affected by the investment philosophy the fund managers adopt. The fund’s investment style could either be active or passive. Assess your investment objective here and determine if an actively or passively managed fund suits you better.
Actively managed funds are mutual funds managed by investment managers who make trading decisions with the goal of outperforming or beating a benchmark in order to achieve “alpha” returns.
Passively managed funds, in contrast, are mutual funds managed by investment managers with the simple goal of tracking and duplicating the performance of an index. Examples of passively managed funds are “index funds” or “Exchange Traded Funds” — both of which are explained in the succeeding section.
Here’s a table summarizing key differences between these two investment styles in fund management.
|Actively Managed Funds||Passively Managed Funds|
|Goal||Outperform the index and achieve "alpha" returns||Mimic the index and achieve similar returns|
|Strategy||"Beat the market"||"Set and forget"|
|Choice of Securities||May invest in securities outside the benchmark index that could produce higher returns||Limited to investing in securities that are included in the benchmark index|
|Fees||Typically charge higher fees as payment for expertise of the fund manager||Typically charge lower fees since fund manager merely adopts index-linked strategy|
Which one is better? Well, this depends on your assessment of your investment goal and risk appetite (read here to find out what your risk tolerance is). If you’re able to take more risks and willing to trust the investment manager to make decisions that could potentially generate you higher profits, opt for actively managed funds.
If, on the other hand, you prefer to achieve returns that are very similar to the index without significant deviations from the performance of a given benchmark, then passively managed funds are the ones for you.
For example, if your goal is to achieve similar returns achieved by the PSEi, opt for a PSEi Equity Index fund which tracks and mimics the performance of the PSE index. If you want potentially higher returns, or so-called “alpha returns” that attempt to outperform the index, choose Actively Managed funds.
3. Match between Investor Profile and Investment Choice
In the Philippines, there are generally four (4) types of asset classes in mutual funds (excluding “Feeder Funds”, which is a different type of fund and explained in detail below). The decision which one to choose should depend on your investment horizon and risk appetite.
We explain in detail each mutual fund type below. We also provide below our suggested matching of investment fund based on your investment goal and risk profile to help you make an informed decision.
|Type of Fund||Income Objective||Risk Tolerance||Investment Period|
|Equity Fund||Capital Appreciation||High Risk||Long-term (At least 5 years)|
|Balanced Fund||Total Return||Medium Risk||Mid- to Long-term (3 to 5 years)|
|Bond Fund||Current Income||Medium Risk||Short- to Mid-term (1 to 3 years)|
|Money Market Fund||Capital Preservation||Low Risk||Short-term (1 year or less)|
|Feeder Fund||Capital Appreciation||High Risk||Long-term (At least 5 years)|
For instance, if you’re looking for high returns (specifically, capital appreciation), you might want to invest in equity funds or balanced funds, provided that you are also willing to absorb potential losses and have no need for the invested capital in the short run.
Equity or balanced funds are usually not advisable for an investor with a low tolerance for risk and with a short-term investment horizon. As risky investments, equity or balanced funds could fluctuate in prices and produce losses in the short run. The investor might decide to withdraw but, in the process, he or she could realize a loss on the investment. For these types of investors, a more conservative bond fund or money market fund might be more appropriate.
What are Equity Mutual Funds?
Equity Funds, also called Stock Funds, primarily invest in the shares of publicly-listed corporations. The fund’s objective is typically capital appreciation or long-term growth through capital gains.
Simply put, money is made when the price of the stock increases way above the purchase price. Dividends earned from the shares are also an important source of income for this type of fund.
Since equity funds primarily invest in stocks, they carry relatively higher risk compared to other funds. Higher risk simply means there’s a higher possibility that the fund, and ultimately you the investor, will lose money. But with this higher risk comes the possibility of earning relatively higher returns as well versus other types of funds.
Most peso-denominated equity funds in the Philippines invest in common stocks or preferred shares of companies whose shares are listed in the Philippine Stock Exchange (PSE). Some dollar-denominated funds invest in stocks of foreign companies traded in foreign stock exchanges.
As mentioned earlier, the investment style of equity funds can be “actively managed” or “passively managed”.
The following table summarizes all “Actively Managed” equity funds in the Philippines, together with their currency denomination (Peso or US Dollar), and the company that manages and sells shares of the fund (fund manager).
List of Equity Funds in the Philippines
|Equity Fund MF||Currency||Fund Manager|
|ALFM Growth Fund||PHP||BPI Investment Management Inc.|
|ATRAM Alpha Opportunity Fund||PHP||ATR Asset Management Inc.|
|ATRAM Asiaplus Equity Fund,Inc.||USD||ATR Asset Management Inc.|
|ATRAM Philippine Equity Opportunity Fund||PHP||ATR Asset Management Inc.|
|Climbs Share Capital Equity Investment Fund||PHP||CLIMBS Investment Management and Advisory Corp.|
|First Metro Consumer Fund on MSCI Philippines||PHP||First Metro Asset Management Inc.|
|First Metro Save And Learn Equity Fund||PHP||First Metro Asset Management Inc.|
|MBG Equity Investment Fund||PHP||MBG Equity Investment Fund, Inc.|
|Philam Strategic Growth Fund||PHP||Philam Asset Management, Inc|
|Philequity Alpha One Fund||PHP||Philequity Management, Inc.|
|Philequity Dividend Yield Fund||PHP||Philequity Management, Inc.|
|Philequity Fund||PHP||Philequity Management, Inc.|
|Philequity MSCI Philippine Index Fund||PHP||Philequity Management, Inc.|
|Soldivo Strategic Growth Fund||PHP||Rampver Financials|
|Sun Life Prosperity Philippine Equity Fund||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity World Voyager Fund||USD||Sun Life Asset Management Company, Inc.|
|United Fund||PHP||Cocolife Asset Management Company, Inc.|
Meanwhile, passively managed funds in the Philippines come in the form of Index Funds or Exchange Traded Funds.
What are Index Funds? They are named such because, as mentioned earlier, they track and attempt to mimic the performance of a benchmark index. Most index funds in the Philippines track the Philippine Stock Exchange index (PSEi), so expect index funds to have returns that are close to the PSEi’s return.
Examples of PSE index funds in the Philippines are as follows.
List of Index Funds in the Philippines
|PSEi Index Fund MF||Fund Manager|
|First Metro Save and Learn Philippine Index Fund||First Metro Asset Management Inc.|
|PAMI Equity Index Fund||Philam Asset Management, Inc|
|Philequity PSE Index Fund||Philequity Management, Inc.|
|Philippine Stock Index Fund||BPI Investment Management Inc.|
|Sun Life Prosperity Philippine Stock Index Fund||Sun Life Asset Management Company, Inc.|
An Exchange Traded Fund or ETF also tracks a benchmark index but, unlike Mutual Funds in the Philippines, ETF is traded and can be bought or sold at any given day at the Philippine Stock Exchange. At present, there is only one ETF available in the Philippines. You can learn more about ETF in the article Investing in ETF (Exchange Traded Funds) in the Philippines.
List of ETF in the Philippines
|First Metro Philippine Equity Exchange Traded Fund||PHP||First Metro Asset Management Inc.|
What are Bond Mutual Funds?
Bond funds primarily invest in fixed-income securities issued by the government or large corporations.
Examples of fixed-income securities include government bonds (such as Treasury bills and RTB or Retail Treasury Bonds), corporate bonds, or LTNCD (Long Term Negotiable Certificate of Deposit). Because bulk of the fund’s investments are in securities with a fixed rate of return, bond funds are generally considered to be less risky versus equity funds.
List of Bond Funds in the Philippines
|Bond Fund MF||Currency||Fund Manager|
|ALFM Peso Bond Fund||PHP||BPI Investment Management Inc.|
|ATRAM Corporate Bond Fund||PHP||ATR Asset Management Inc.|
|Cocolife Fixed Income Fund||PHP||Cocolife Asset Management Company, Inc.|
|Ekklesia Mutual Fund Inc.||PHP||BPI Investment Management Inc.|
|First Metro Save And Fixed Income Fund||PHP||First Metro Asset Management Inc.|
|Philam Bond Fund||PHP||Philam Management, Inc.|
|Philam Managed Income Fund||PHP||Philam Management, Inc.|
|Philequity Peso Bond Fund||PHP||Philequity Management, Inc.|
|Soldivo Bond Fund||PHP||Rampver Financials|
|Sun Life of Canada Prosperity Bond Fund||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity GS Fund||PHP||Sun Life Asset Management Company, Inc.|
|ALFM Dollar Bond Fund||USD||BPI Investment Management Inc.|
|ALFM Euro Bond Fund||EUR||BPI Investment Management Inc.|
|ATRAM Total Return Bond Fund||USD||ATR Asset Management Inc.|
|First Metro Save & Learn Dollar Bond Fund||USD||First Metro Asset Management Inc.|
|PAMI Global Bond Fund||USD||Philam Asset Management, Inc|
|Philam Dollar Bond Fund||USD||Philam Asset Management, Inc|
|Philequity Dollar Income Fund||USD||Philequity Management, Inc.|
|Sun Life Prosperity Dollar Abundance Fund||USD||Sun Life Asset Management Company, Inc.|
What are Balanced Mutual Funds?
Balanced funds are a type of pooled funds invested in a mixture of equities and fixed-income securities, such as bonds. The goal is to provide total return consisting of a high level of income consistent with preservation of capital and liquidity.
Balanced funds are ideal for investors who want the benefits of both stocks (capital appreciation) and fixed-income securities (preservation of capital).
List of Balanced Funds in the Philippines
|Balanced Fund MF||Currency||Fund Manager|
|ATRAM Dynamic Allocation Fund||PHP||ATR Asset Management Inc.|
|ATRAM Philippine Balanced Fund||PHP||ATR Asset Management Inc.|
|Cocolife Dollar Fund Builder||USD||Cocolife Asset Management Company, Inc.|
|First Metro Save And Learn Balanced Fund||PHP||First Metro Asset Management Inc.|
|First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund||PHP||First Metro Asset Management Inc.|
|Grepalife Balanced Fund||PHP||Grepalife Asset Management Corp.|
|NCM Mutual Fund||PHP||Banco de Oro Trust Group|
|PAMI Asia Balanced Fund||USD||Philam Asset Management, Inc|
|PAMI Horizon Fund||PHP||Philam Asset Management, Inc|
|Philam Fund||PHP||Philam Asset Management, Inc|
|Solidaritas Fund||PHP||BPI Investment Management Inc.|
|Sun Life of Canada Prosperity Balanced Fund||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Achiever Fund 2028||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Achiever Fund 2038||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Achiever Fund 2048||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dollar Advantage Fund||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dollar Wellspring Fund||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dynamic Fund||PHP||Sun Life Asset Management Company, Inc.|
What are Money Market Mutual Funds?
Finally, money market funds provide current income to investors by placing the pooled funds in short-term securities with maturities of one year or less. Examples of investment assets that usually comprise the portfolio of a money market fund are short-term government securities (such as T-bills or Treasury bonds with 1-year maturities), special deposit arrangements, short-term notes, and time deposits.
Among the four types of investment funds, money market funds provide the least amount of risk.
List of Money Market Funds in the Philippines
|Money Market Fund MF||Currency||Fund Manager|
|ALFM Money Market Fund||PHP||BPI Investment Management Inc.|
|First Metro Save and Learn Money Market Fund||PHP||First Metro Asset Management Inc.|
|Sun Life Prosperity Peso Starter Fund||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dollar Starter Fund||USD||Sun Life Asset Management Company, Inc.|
What are Feeder Funds?
In the Philippines, feeder funds invest the pooled money in a “target fund.” Simply put, instead of using the collected money to directly invest in stocks, bonds, or any other security, they are invested and “feeded into” a target fund — hence the name “feeder fund” — with the target fund usually just another Mutual Fund or ETF offered in another country.
List of Feeder Funds (Mutual Fund) in the Philippines
|Feeder Fund MF||Currency||Fund Manager|
|ALFM Global Multi-Asset Income Fund||PHP||BPI Investment Management Inc.|
|Sun Life Prosperity World Equity Index Feeder Fund||PHP||Sun Life Asset Management Company, Inc.|
|ALFM Global Multi-Asset Income Fund||USD||BPI Investment Management Inc.|
How to Open a Mutual Fund Account in the Philippines
Just like my experience when I first invested in mutual funds, opening a mutual fund account is actually easy. Simply follow this 5-step guide to begin your mutual fund investing journey.
Step 1: Choose a mutual fund that matches your investment goal and risk tolerance.
Here’s a full list of all available mutual funds in the Philippines, arranged alphabetically. Choose the fund/s that you like and which match your investment goal and risk appetite.
Complete List of Philippine Mutual Funds
|Mutual Fund||Type||Currency||Fund Manager|
|ALFM Dollar Bond Fund||Bond||USD||BPI Investment Management Inc.|
|ALFM Euro Bond Fund||Bond||EUR||BPI Investment Management Inc.|
|ALFM Global Multi-Asset Income Fund||Feeder Fund||USD||BPI Investment Management Inc.|
|ALFM Growth Fund||Equity||PHP||BPI Investment Management Inc.|
|ALFM Money Market Fund||Money Market||PHP||BPI Investment Management Inc.|
|ALFM Peso Bond Fund||Bond||PHP||BPI Investment Management Inc.|
|ATRAM Alpha Opportunity Fund||Equity||PHP||ATR Asset Management Inc.|
|ATRAM Asiaplus Equity Fund,Inc.||Equity||USD||ATR Asset Management Inc.|
|ATRAM Corporate Bond Fund||Bond||PHP||ATR Asset Management Inc.|
|ATRAM Dynamic Allocation Fund||Balanced||PHP||ATR Asset Management Inc.|
|ATRAM Philippine Balanced Fund||Balanced||PHP||ATR Asset Management Inc.|
|ATRAM Philippine Equity Opportunity Fund||Equity||PHP||ATR Asset Management Inc.|
|ATRAM Total Return Bond Fund||Bond||USD||ATR Asset Management Inc.|
|Climbs Share Capital Equity Investment Fund||Equity||PHP||CLIMBS Investment Management and Advisory Corp.|
|Cocolife Dollar Fund Builder||Balanced||USD||Cocolife Asset Management Company, Inc.|
|Cocolife Fixed Income Fund||Bond||PHP||Cocolife Asset Management Company, Inc.|
|Ekklesia Mutual Fund Inc.||Bond||PHP||BPI Investment Management Inc.|
|First Metro Consumer Fund on MSCI Philippines||Equity||PHP||First Metro Asset Management Inc.|
|First Metro Philippine Equity Exchange Traded Fund||ETF||PHP||First Metro Asset Management Inc.|
|First Metro Save & Learn Dollar Bond Fund||Bond||USD||First Metro Asset Management Inc.|
|First Metro Save And Fixed Income Fund||Bond||PHP||First Metro Asset Management Inc.|
|First Metro Save And Learn Balanced Fund||Balanced||PHP||First Metro Asset Management Inc.|
|First Metro Save And Learn Equity Fund||Equity||PHP||First Metro Asset Management Inc.|
|First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund||Balanced||PHP||First Metro Asset Management Inc.|
|First Metro Save and Learn Money Market Fund||Money Market||PHP||First Metro Asset Management Inc.|
|First Metro Save and Learn Philippine Index Fund||Equity (Index Fund)||PHP||First Metro Asset Management Inc.|
|Grepalife Balanced Fund||Balanced||PHP||Grepalife Asset Management Corp.|
|Grepalife Dollar Bond Fund||Bond||USD||Grepalife Asset Management Corp.|
|Grepalife Fixed Income Fund||Bond||PHP||Grepalife Asset Management Corp.|
|MBG Equity Investment Fund||Equity||PHP||MBG Equity Investment Fund, Inc.|
|NCM Mutual Fund||Balanced||PHP||Banco de Oro Trust Group|
|PAMI Asia Balanced Fund||Balanced||USD||Philam Asset Management, Inc|
|PAMI Equity Index Fund||Equity (Index Fund)||PHP||Philam Asset Management, Inc|
|PAMI Global Bond Fund||Bond||USD||Philam Asset Management, Inc|
|PAMI Horizon Fund||Balanced||PHP||Philam Asset Management, Inc|
|Philam Bond Fund||Bond||PHP||Philam Asset Management, Inc|
|Philam Dollar Bond Fund||Bond||USD||Philam Asset Management, Inc|
|Philam Fund||Balanced||PHP||Philam Asset Management, Inc|
|Philam Managed Income Fund||Money Market||PHP||Philam Asset Management, Inc|
|Philam Strategic Growth Fund||Equity||PHP||Philam Asset Management, Inc|
|Philequity Alpha One Fund||Equity||PHP||Philequity Management, Inc.|
|Philequity Dividend Yield Fund||Equity||PHP||Philequity Management, Inc.|
|Philequity Dollar Income Fund||Bond||USD||Philequity Management, Inc.|
|Philequity Fund||Equity||PHP||Philequity Management, Inc.|
|Philequity MSCI Philippine Index Fund||Equity||PHP||Philequity Management, Inc.|
|Philequity Peso Bond Fund||Bond||PHP||Philequity Management, Inc.|
|Philequity PSE Index Fund||Equity (Index Fund)||PHP||Philequity Management, Inc.|
|Philippine Stock Index Fund||Equity (Index Fund)||PHP||BPI Investment Management Inc.|
|Soldivo Bond Fund||Bond||PHP||Rampver Financials|
|Soldivo Strategic Growth Fund||Equity||PHP||Rampver Financials|
|Solidaritas Fund||Balanced||PHP||BPI Investment Management Inc.|
|Sun Life of Canada Prosperity Balanced Fund||Balanced||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life of Canada Prosperity Bond Fund||Bond||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Achiever Fund 2028||Balanced||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Achiever Fund 2038||Balanced||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Achiever Fund 2048||Balanced||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dollar Abundance Fund||Bond||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dollar Advantage Fund||Balanced||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dollar Starter Fund||Money Market||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dollar Wellspring Fund||Balanced||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Dynamic Fund||Balanced||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity GS Fund||Bond||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Money Market Fund||Money Market||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Philippine Equity Fund||Equity||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Philippine Stock Index Fund||Equity (Index Fund)||PHP||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity World Voyager Fund||Equity||USD||Sun Life Asset Management Company, Inc.|
|United Fund||Equity||PHP||Cocolife Asset Management Company, Inc.|
Step 2: Find a licensed agent selling the fund.
You probably know this already, but you’ll need to find a mutual fund agent to assist you in opening an account. The agent is a requirement; you won’t be allowed to open an account unless you have an agent.
Fact: the sales load charged to your account, whether the front-end sales load during account opening or the back-end sales load upon withdrawing your investment, is actually a commission paid to your agent.
If you personally do not know any agent, you may visit the mutual fund company’s office or contact the company. An agent will be assigned to you.
You can also invest in mutual funds online. Several mutual fund companies now allow investors to directly invest in their products without the need for an investor to look for an agent.
Examples are COL Financial, which operates COL Fund Source, First Metro Securities, which operates Fundsmart, and ATRAM which operates Seedbox.
Users of GCash can also invest in mutual funds with just P50.00. Yup, just P50.00. To invest in mutual funds via GCash, simply go to the Invest Money section in the GCash app.
Investors need not personally look for an agent anymore since these companies themselves are the authorized mutual fund agents or distributors.
Companies offering Mutual Funds online
|Mutual Fund Online Distributor||Platform||Website|
|1||COL Financial||COL Fund Source||www.colfinancial.com|
|2||First Metro Securities||Fundsmart||www.firstmetrosec.com.ph|
Step 3: Complete the application documents.
Prospective mutual fund investors will normally be asked to complete three forms prior to investing:
- Personal Information Sheet or Application Form
- Investor Profile Questionnaire or Investor Assessment Form; and
- Order Ticket or Online Order Form
The forms may vary depending on the mutual fund company, but they are pretty much the same thing.
The Personal Information Sheet or Application Form requires you to complete your personal details. The Investor Profile or Investor Assessment Form, meanwhile, evaluates and identifies your risk tolerance and investment goal. Finally, the Order Ticket or Online Order Form contains your specific instruction on the type and number of mutual fund shares you want to purchase.
Those buying mutual funds online will be asked to fill out similar forms online or through the mobile app and to perform the “Know Your Customer” (KYC) procedure using the online platform as well.
Step 4: Fund your mutual fund account.
What’s the minimum amount to invest in mutual funds? In the Philippines, you can start investing for as low as P1,000! Additional investments can also be made with minimum P500 top-up amount.
Mutual funds offering P1,000 minimum investment include ATRAM, Sunlife, and PhilEquity. Mutual funds of First Metro Asset Management Inc. (FAMI) and BPI’s ALFM, meanwhile, have a P5,000 minimum investment required.
As mentioned earlier, GCash users can actually open a mutual fund account through ATRAM for as low as P50.00. The investment has to be done via GCash Invest Money section in the GCash app.
Make sure you transact with an authorized representative of mutual fund companies! There have been instances in the past wherein a supposed agent did not remit the investment to the mutual fund company.
Unfortunately, I had this exact experience with a mutual fund agent who was even a relative of mine.
I opened a mutual fund account with my uncle as agent of a popular mutual fund company in the Philippines. During the initial years, I never had problems topping up my investment by simply giving him the money. He told me that it’s actually his responsibility as agent to help me process my additional investments. I agreed to the setup because it was also convenient for me, since I never had to personally visit the mutual fund office.
And then one day, when I checked my account, it was missing a few thousand pesos that I gave to my uncle as additional investment. He confessed that he took the money and never added it to my account. Good thing that he repaid me after a few months, but I decided to find a new agent after the incident.
The lesson, therefore, is to make sure you transact only with legitimate and trustworthy representatives of the company. Better yet, make the payment yourself in the mutual fund company’s office, branch, or authorized payment outlets.
You may deposit your investment or make online fund transfers in local banks that already have partnerships with the mutual fund. Upon payment, make sure you secure a copy of the payment receipt and the processed Order Ticket as proof of your investment.
Step 5: Regularly monitor your investment.
Ask your agent how you can regularly check the status of your investment. Some funds give you online access where you can track your portfolio, so open an online account to easily track your investment’s performance. Some funds merely provide NAVPS updates via email or postal mail, which means you’ll have to make your own manual computations regarding your earnings.
Of course, if you bought mutual funds online using the online distributors above, chances are the platform they have already offers real-time monitoring of your account.
How to Compute Earnings in Mutual Funds
Now to help you understand how much exactly you’re earning from your mutual fund investment, here’s a simple guide to do your own computations.
A bit of background first: mutual fund investors make money when the mutual fund increases in value. This happens because a mutual fund can earn in two ways:
- From the capital gain, or increase in value, of the securities held and owned by the fund; and
- Through dividend or interest income received from the assets held by the fund.
Proceeds from the earnings are reduced by the fund’s operating charges and other expenses. The remainder is then passed along as income to investors of the mutual fund.
The value of the mutual fund is measured by what is called Net Asset Value per Share (NAVPS). The NAVPS is calculated every day based on the marked-to-market value of the fund’s total asset divided by the total number of outstanding shares of the fund.
If the NAVPS is increasing, then that means mutual fund investors are making money from the fund. If the NAVPS is decreasing, then this means the fund is losing value and the investors are losing money.
You can actually compute your own earnings as long as you know the NAVPS of your mutual fund. Follow our step-by-step guide so that you yourself can personally compute the gains (or losses) of your investment.
Step 1: Determine the number of shares you own
You know this already: when you invest in mutual funds, you’re actually buying “shares” of the mutual fund company. Each share is priced using the NAVPS, a figure that changes every day since it represents the “market value” of all investments owned by the mutual fund company.
Let’s assume you plan to invest P100,000 in a mutual fund. You checked and saw that the mutual fund’s NAVPS price is currently P1.75.
Given this NAVPS value, if you invested P100,000 you will receive 57,142 shares of this mutual fund, computed as follows:
- P100,000 divided by P1.75 = 57,142 shares
The total value, therefore, of your mutual fund investment is P99,998.50, computed as follows:
- 57,142 shares x P1.75 NAVPS = P99,998.50
Does this mean the entire P100,000 is not fully invested? You’re correct, and you actually will get a change of P1.50 from the company. (Some companies, though, will just give you a fraction of the shares valued at P1.50 so that they will no longer have to give you back the P1.50 change. We will not consider that, however, in this example.)
For simplicity purposes, we will also not consider any fees or sales loads charged by the fund. Do note, though, that most funds will charge a fee either upon investment (entry fee or front-end sales load) or when redeeming your mutual fund shares (exit fee or back-end sales load).
Step 2: Determine the current NAVPS
At any day, you can compute the value of your mutual fund investment. The only two things you need to know are:
- Number of shares you own; and
- NAVPS price on that day
Let’s assume that at the end of one year, the NAVPS of your mutual fund increased to P2.50.
To calculate the profit, here’s what you need to do. Get the difference between the current NAVPS and the NAVPS when you originally bought the shares. Then multiply this figure with the total number of shares you own to get the amount of your profit.
|Original NAVPS when you bought the MF||P1.75|
|Difference in NAVPS prices (P2.50 – P1.75)||P0.75|
|Number of Shares Owned||57,142|
|Profit (P0.75 x 57,142)||P42,856.50|
This means your P100,000 investment has already produced you a profit of P42,856.50. Not bad!
Alternatively, you can just compare the current total fund value and the initial fund value. The “current total fund value” is the product of the number of shares you own and the current NAVPS price. The “initial fund value,” meanwhile, is the product of the number of shares you own and the original NAVPS price.
|Current fund value (57,142 shares x P2.50 NAVPS)||P142,855.00|
|Beginning fund value (57,142 shares x P1.75 NAVPS)||P99,998.50|
|Difference in fund values (Total Profit =P142,855.00 – P99,998.50)||P42,856.50|
As you can see, this computation results in the same amount of profit we computed using the other formula above.
One important point to remember, though. This profit is what’s called “paper profit” or “unrealized income.” That’s because you have not redeemed the shares yet. Any day afterwards, the NAVPS could still change which means your fund value (and profit) could also change. When that happens, whatever “paper profit” you have computed become irrelevant.
We’ll show this in the next example.
Step 3: Calculate actual profit at time of redemption
Let’s assume it’s now the 2nd year and you wanted to encash and redeem your shares.
Before we proceed, we’ll highlight again that the fund value and your profits at the end of Year 1 are now irrelevant. Yup, they are NOT important anymore at this point. Whatever “profit” you have previously gained was not “realized” since you did not redeem the shares.
Let’s assume that at the end of Year 2, the NAVPS price is P2.00. As in Step 2, we can compute the profit by comparing the current and original NAVPS:
|Difference in NAVPS prices (P2.00 – P1.75)||P0.25|
|Number of Shares Owned||57,142|
|Profit (P0.25 x 57,142)||P14,285.50|
At the end of Year 2, your mutual fund investment has earned profits of P14,285.50.
If you redeemed all 57,142 shares, you will get P14,285.50 cash as profit.
The total money you would get from the mutual fund is this profit plus the original investment (P14,285.50 + P99,998.50), which totals P114,284.00.
The total cash proceeds, which you’ll receive upon redemption, can also be computed this way:
|Number of Shares Owned||57,142|
|Total Fund Value (P2.00 x 57,142)||P114,284.00|
Again, be reminded that this computation does not consider any fees charged by the fund. Your fund value may be reduced by any exit fees or back-end sales loads charged by the mutual fund.
Whew, that’s a lot! We hope this comprehensive and extensive guide on mutual fund investing will help you become an informed mutual fund investor. Happy investing!
2 thoughts on “My experience investing in Mutual Funds in the Philippines”
Been wanting to invest my money in mutual funds here in the Philippines. Thank you for this wonderful insight!
Thank you Sir James!