How do I invest in Mutual Funds? And which ones are the best funds to invest in the Philippines?
Actually, the word “best” may be relative and it’s really difficult to pinpoint the best mutual fund based on one criteria alone. But one of our main goals in PinoyMoneyTalk is to give you objective, practical, and useful information about investment opportunities, so what we’ll do is hopefully give you enough information to help you arrive at your own decision regarding suitable mutual funds that are worthy of your investment.
So in this article, we’ll explain in detail:
- What Mutual Funds are and how they differ from other investments such as VUL and UITF;
- Things to consider before investing in a Mutual Fund;
- How to invest in Mutual Funds (with a step-by-step guide);
- List of Best Performing Mutual Funds as of April 2020;
- How to know if you’re earning in Mutual Funds; and
- Performance ranking of Mutual Funds in the past years.
With this guide, we hope that you’ll be able to come up with an informed decision as to where to best put your hard-earned money!
(If you want to skip to the latest list of best performing mutual funds, simply head over to the section “Top 10 Best Mutual Funds in 2020”.)
My Mutual Fund Investing Story
First, let me tell you an interesting story regarding my experience making my very first mutual fund investment back in the early 2000s.
I started investing in mutual funds when I was 22 years old. I may be relatively young back then, but I was an Overseas Filipino Worker (OFW) and was able to save some money 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, or Pru Life? Take a guess!).
Anyway, I got interested with the promise that it is an “investment” that can help me “retire rich”. Back then, and even until now, I love the idea of retiring early and retiring financially free. I do not plan on working for the rest of my life, so having an opportunity to help me grow my money while I was young made me decide to drop by the mutual fund company’s office on that same day.
I went to the reception and 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 (I was the only one there besides the secretary): “Nasaan yung kliyente? Wala namang investor dito…”
I stifled a laugh, unsure if I should be offended or amused but 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 what mutual funds are how they can be a good investment opportunity to help me reach my financial goals.
What are Mutual Funds?
So what are Mutual Funds?
By definition, a Mutual Fund is 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 be intimidated by that definition. Simply put, it is a collection of investments gathered from investors which will be managed by a group of investment managers who will trade and invest in various assets with the hopes of making money for all investors.
In the Philippines, Mutual Funds are created as independent 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 shares of, say, Jollibee Foods Corp. (JFC), Megaworld Corp. (MEG), or Ayala Land Inc. (ALI), you also become a part-owner or shareholder of the mutual fund company when you decide to make an investment. That’s one primary difference between a similar investment product called Unit Investment Trust Funds (UITF).
Mutual Funds vs. UITF: What’s the difference?
What are UITF? Just like mutual funds, Unit Investment Trust Funds or UITF are also collective investment schemes where pooled funds are managed by an investment team that invests in a variety of investment securities.
UITF are typically offered by banks or trust corporations in the Philippines and are offered to investors as “investment products.” That’s a key difference between these two investment outlets. While investors of mutual funds become shareholders and part-owners of the mutual fund company, investors of UITF do not become shareholders. Instead, they merely buy “units of participation.”
Mutual Funds vs. VUL: What’s the difference?
How about Variable Universal Life (VUL) insurance, also called Variable Unit-Linked insurance? How are VUL different from Mutual Fund or UITF?
Simply speaking, a VUL is a 2-in-1 product which combines the features of an insurance product and an investment product. Its insurance component offers a “death benefit,” wherein beneficiaries receive a certain amount in case of the death of the planholder.
This is possible because a portion of the VUL investment is actually used to pay the “insurance premium”. The remainder from the investment, after the insurance premium is deducted, is placed in investible assets and managed similar to a Mutual Fund or UITF.
Here’s a more detailed explanation of the differences between the three products VUL, UITF, and Mutual Funds.
Differences between Mutual Funds, VUL & UITF
|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)|
Nature 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. Thus, you 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 bank. You do not get the right to vote, unlike in a mutual fund where you can vote on certain matters for approval by the 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 actually 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) must have received 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 a current rule by the BSP that UITF sellers must have received the “Certified UITF Marketing Personnel” license. At present, though, this plan is still pending and not yet a strict requirement for personnel offering UITF.
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 by the Insurance Commission (IC).
Owner and Fund Manager. Mutual Funds are marketed and offered by SEC-registered mutual fund companies. VUL products are offered by companies primarily selling life insurance. Finally, UITF in the Philippines are offered by banks or companies with a Trust license (i.e., Trust Corporation).
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 covered by the Philippine Deposit Insurance Corporation (PDIC). 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).
Top 10 Best Mutual Funds in 2020
We invest with the primary goal of making money, which is why the performance of a mutual fund, summarized by its rate of return, is an appealing metric to investors. If your ultimate goal is to quickly grow money, choose funds that can provide the highest possible returns.
Looking at the profit performance of mutual funds in the country, here are the 10 Best Performing Mutual Funds (denominated in Philippine Peso) that achieved the highest returns from January to April 2020.
|Rank||Mutual Fund / ETF||Type||Jan-April 2020 Return|
|1||Soldivo Bond Fund||Bond Fund||5.50%|
|2||Philam Bond Fund||Bond Fund||2.52%|
|3||First Metro Save and Learn Fixed Income Fund||Bond Fund||2.43%|
|4||Ekklesia Mutual Fund||Bond Fund||2.00%|
|5||Philequity Peso Bond Fund||Bond Fund||1.96%|
|6||Cocolife Fixed Income Fund||Bond Fund||1.65%|
|7||Philam Managed Income Fund||Bond Fund||1.57%|
|8||ATRAM Corporate Bond Fund||Bond Fund||1.40%|
|9||ALFM Peso Bond Fund||Bond Fund||1.28%|
|10||Sun Life Prosperity GS Fund||Bond Fund||1.26%|
You might argue that some funds are certainly not comparable with each other since each fund has varying investment mandate. That’s true. A money market fund, for instance, is usually mandated to invest only in securities that mature in one year or less. As such, they do not compare well to an equity fund investing in high-risk, high return shares of stocks of a publicly listed company.
But if your primary goal is to quickly grow your money, your best bet is to invest in a fund that can provide the highest possible return, regardless of asset class. That’s our reason for identifying the 10 funds with the highest returns.
As can be seen below, the list of best performing funds from January to April 2020 is dominated purely by Bond Funds.
One would expect that Equity Funds would always yield the highest return compared to all asset classes. But this is not true all the time, especially during times of economic crises which we’re seeing at present in local and global markets. The Philippine Stock Exchange index (PSEi), for example, is down 27% from January to April 2020. Thus Equity Funds that are invested in the PSE would likely follow the trend and incur steep losses too.
As investors flee stock markets, their funds in turn flow into the contrarian and more conservative asset class: Bonds and Fixed Income instruments. This explains why Bond Funds currently outperform Equity Funds, as summarized in the list below.
What about the comparative performance of mutual funds in their respective asset category? We summarize them below in the fund performance of MFs, ranked by type based on returns from the period January to April 2020. The figures below were sourced from the industry association of fund managers, Philippine Investment Funds Association.
Consistency of returns is something you should consider when choosing which funds to invest in. Don’t be blinded by “flash-in-the-pan” returns, or high profits in the short run which cannot be duplicated in succeeding years. This is also the reason why we show below the 1-year, 3-year, and 5-year returns of funds so you can compare their longer-term performance.
Best Peso Equity Funds in 2020
|Rank||Peso Equity Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Philequity Alpha One Fund||-16.95%||No data||No data||No data|
|2||First Metro Consumer Fund on MSCI Phils. IMI||-21.70%||-24.54%||No data||No data|
|3||First Metro Save and Learn Equity Fund||-23.30%||-26.39%||-8.40%||-6.81%|
|4||Philam Strategic Growth Fund||-24.24%||-26.45%||-9.10%||-6.63%|
|5||Philequity Dividend Yield Fund||-25.05%||-27.40%||-9.02%||-5.83%|
|7||ALFM Growth Fund||-25.39%||-29.19%||-11.10%||-7.68%|
|8||First Metro Save and Learn Philippine Index Fund||-25.49%||-28.35%||-12.28%||No data|
|10||Sun Life Prosperity Philippine Stock Index Fund||-26.53%||-28.31%||-9.24%||No data|
|11||Philippine Stock Index Fund||-26.55%||-28.19%||-9.09%||-5.76%|
|12||PAMI Equity Index Fund||-26.63%||-28.68%||-9.69%||No data|
|13||Philequity PSE Index Fund||-26.65%||-28.31%||-9.11%||-5.58%|
|14||Philequity MSCI Philippine Index Fund||-26.71%||-29.19%||No data||No data|
|15||MBG Equity Investment Fund||-27.20%||-40.33%||No data||No data|
|16||Climbs Share Capital Equity Investment Fund||-27.87%||-31.25%||No data||No data|
|17||Sun Life Prosperity Philippine Equity Fund||-28.60%||-31.23%||-9.96%||-6.77%|
|18||ATRAM Alpha Opportunity Fund||-30.11%||-40.76%||-13.69%||-8.67%|
|19||ATRAM Philippine Equity Opportunity Fund||-31.27%||-39.21%||-15.72%||-10.36%|
|20||Soldivo Strategic Growth Fund||-31.41%||-38.27%||-13.15%||-9.81%|
Best ETF in the Philippines in 2020
|Rank||ETF||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||First Metro Phil. Equity Exchange Traded Fund||-26.57%||-28.04%||-8.62%||-4.94%|
Best Dollar Equity Funds in 2020
|Rank||Dollar Equity Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Sun Life Prosperity World Voyager Fund||-9.32%||-4.03%||3.37%||No data|
|2||ATRAM AsiaPlus Equity Fund||-11.67%||-12.11%||-1.61%||-3.61%|
Best Balanced Funds in 2020
|Rank||Peso Balanced Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||ATRAM Dynamic Allocation Fund||-4.52%||-13.93%||-5.32%||-4.94%|
|2||NCM Mutual Fund of the Phils.||-9.45%||-7.88%||-1.83%||-1.60%|
|3||ATRAM Philippine Balanced Fund||-9.99%||-15.66%||-5.55%||-3.49%|
|4||First Metro Save and Learn Balanced Fund||-11.22%||-12.07%||-2.98%||-4.36%|
|5||Sun Life Prosperity Achiever Fund 2028||-11.39%||-10.79%||No data||No data|
|6||PAMI Horizon Fund||-12.38%||-10.09%||-3.42%||-3.00%|
|9||Sun Life of Canada Prosperity Balanced Fund||-18.60%||-18.93%||-5.39%||-4.03%|
|10||First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund||-18.64%||No data||No data||No data|
|11||Sun Life Prosperity Achiever Fund 2038||-20.07%||-20.84%||No data||No data|
|12||Sun Life Prosperity Dynamic Fund||-20.46%||-21.30%||-6.48%||-5.54%|
|13||Sun Life Prosperity Achiever Fund 2048||-22.11%||-23.02%||No data||No data|
Best Dollar Balanced Mutual Funds in 2020
|Rank||Dollar Balanced Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Cocolife Dollar Fund Builder||-0.73%||4.52%||2.31%||1.35%|
|2||Sun Life Prosperity Dollar Wellspring Fund||-5.88%||-2.63%||0.99%||No data|
|3||Sun Life Prosperity Dollar Advantage Fund||-7.89%||-3.77%||2.41%||1.54%|
|4||PAMI Asia Balanced Fund||-10.43%||-6.25%||-0.73%||-2.29%|
Best Bond Funds in 2020
|Rank||Peso Bond Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Soldivo Bond Fund||5.50%||10.55%||3.38%||2.43%|
|2||Philam Bond Fund||2.52%||10.81%||3.59%||-0.11%|
|3||First Metro Save and Learn Fixed Income Fund||2.43%||7.09%||2.97%||5.11%|
|4||Ekklesia Mutual Fund||2.00%||4.97%||2.79%||2.19%|
|5||Philequity Peso Bond Fund||1.96%||6.72%||3.61%||1.75%|
|6||Cocolife Fixed Income Fund||1.65%||4.86%||5.15%||2.13%|
|7||Philam Managed Income Fund||1.57%||6.51%||3.61%||1.95%|
|8||ATRAM Corporate Bond Fund||1.40%||2.25%||0.91%||1.85%|
|9||ALFM Peso Bond Fund||1.28%||4.11%||3.02%||1.47%|
|10||Sun Life Prosperity GS Fund||1.26%||7.40%||4.03%||2.85%|
|11||Sun Life of Canada Prosperity Bond Fund||1.23%||7.60%||4.49%||2.47%|
Best Dollar & Euro Bond Funds in 2020
|Rank||Dollar & Euro Bond Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||ALFM Dollar Bond Fund||-0.06%||2.88%||2.24%||2.38%|
|2||First Metro Save and Learn Dollar Bond Fund||-0.39%||1.58%||1.06%||0.96%|
|3||Sun Life Prosperity Dollar Abundance Fund||-0.60%||5.98%||2.11%||2.13%|
|4||Philam Dollar Bond Fund||-0.80%||5.01%||2.60%||2.17%|
|5||Philequity Dollar Income Fund||-1.23%||2.27%||1.47%||1.39%|
|6||ATRAM Total Return Dollar Bond Fund||-1.84%||1.42%||1.97%||1.80%|
|7||ALFM Euro Bond Fund||-2.69%||-1.03%||0.45%||0.56%|
|8||PAMI Global Bond Fund||-4.32%||-1.62%||-0.71%||-0.98%|
Best Money Market Funds in 2020
|Rank||Peso Money Market Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||ALFM Money Market Fund||1.22%||3.79%||3.08%||2.32%|
|2||First Metro Save and Learn Money Market Fund||1.04%||2.70%||No data||No data|
|3||Sun Life Prosperity Money Market Fund||1.02%||3.34%||2.99%||2.52%|
Best Dollar Money Market Mutual Funds in 2020
|Rank||Dollar Money Market Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Sun Life Prosperity Dollar Starter Fund||0.40%||1.65%||No data||No data|
Best Feeder Funds in 2020
|Rank||Feeder Fund||Jan-April 2020 Return||1-Year Return||3-Year Return||5-Year Return|
|1||ALFM Global Multi-Asset Income Fund||-9.09%||No data||No data||No data|
“OK, I’m ready to invest! How do I begin investing?”
Hold it for a while and continue reading first to find out three (3) key considerations that you should think through before you put your money in Mutual Funds. Make sure you thoroughly assess these three things; otherwise, you might end up with unacceptable losses on your investment!
3 Things to Consider Before Investing in Mutual Funds
Without a doubt, returns or profits earned by 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. Other factors should be considered because these, too, can affect the long-term performance of your investment.
Here are three (3) things about mutual funds that you should assess before choosing which ones should have your money.
1. Long-Term Return (Consistent Performance) of the Fund
The fund performance, summarized by the rate of return or profit generated, 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 focus instead on consistent performance over the long run, that is, preferably 3-year or 5-year returns of the fund. This is also the reason why we include the 1-year, 3-year, and 5-year returns of mutual funds in the Fund Rankings tables.
You shouldn’t choose funds with returns that are “flash in the pan” — meaning, a winning streak for some period of time but cannot be replicated or repeated over the long run. We can’t tell you which specific rate of return 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 they adopted. 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.
If you’re able to take more risks and you’re willing to trust the fund’s investment manager to make decisions that could potentially generate you higher profits (but take note, this could also lead to a possibility of loss), 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 our suggested matching of investment fund based on your investment goal and personality to help you make an informed decision. This is explained in the latter section on “How to Invest in Mutual Funds”.
Mutual Funds Available in the Philippines
There are four (4) basic types of mutual funds, plus one special type (i.e., Feeder Fund), that are currently offered to investors in the Philippines. Learn more about them below.
What are EQUITY or STOCK 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 speaking, money is made when the price of the company’s 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 put majority of its investible assets on stocks, they carry relatively higher risk compared to other assets. 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 compared to 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, meanwhile, 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 in 2020
|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 in 2020
|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 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 in 2020
|First Metro Philippine Equity Exchange Traded Fund||PHP||First Metro Asset Management Inc.|
What are BOND Mutual Funds?
Bond funds invest primarily in fixed-income securities issued by the government or large domestic 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 in 2020
|Bond Fund MF||Currency||Fund Manager|
|ALFM Dollar Bond Fund||USD||BPI Investment Management Inc.|
|ALFM Euro Bond Fund||EUR||BPI Investment Management Inc.|
|ALFM Peso Bond Fund||PHP||BPI Investment Management Inc.|
|ATRAM Corporate Bond Fund||PHP||ATR Asset Management Inc.|
|ATRAM Total Return Bond Fund||USD||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 & Learn Dollar Bond Fund||USD||First Metro Asset Management Inc.|
|First Metro Save And Fixed Income Fund||PHP||First Metro Asset Management Inc.|
|Grepalife Dollar Bond Fund||USD||Grepalife Asset Management Corp.|
|Grepalife Fixed Income Fund||PHP||Grepalife Asset Management Corp.|
|PAMI Global Bond Fund||USD||Philam Asset Management, Inc|
|Philam Bond Fund||PHP||Philam Asset Management, Inc|
|Philam Dollar Bond Fund||USD||Philam Asset Management, Inc|
|Philequity Dollar Income Fund||USD||Philequity 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 Dollar Abundance Fund||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity GS Fund||PHP||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 in 2020
|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 in 2020
|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.|
|Philam Managed Income Fund||PHP||Philam Asset Management, Inc|
|Sun Life Prosperity Dollar Starter Fund||USD||Sun Life Asset Management Company, Inc.|
|Sun Life Prosperity Money Market Fund||PHP||Sun Life Asset Management Company, Inc.|
What are FEEDER Funds?
At present, there is one special fund offered in the Philippines, the ALFM Global Multi-Asset Income Fund managed by BPI Investment Management Inc., which invests the pooled money in a “Target Fund.” Instead of using the collected money to be invested directly in investment securities, they are invested and “feeded into” a target fund, which is usually just another Mutual Fund or ETF offered in another country.
List of Feeder Fund (Mutual Fund) in 2020
|Feeder Fund MF||Currency||Fund Manager|
|ALFM Global Multi-Asset Income Fund||USD||BPI Investment Management Inc.|
How to Invest in Mutual Funds
Just like my experience when I first invested in mutual funds when I was 25 years old, opening a mutual fund account is actually easy. But first, you need to choose which mutual fund suits you best. To help you decide which funds are right for you, think about your investment objective, risk profile, and investment horizon.
How to Choose the Best Mutual Fund
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 (i.e., high tolerance for risk) and have no need for the invested capital in the short run (i.e., long-term investment horizon).
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.
The following table summarizes the type of fund applicable to investors depending on the investment profile.
Mutual Funds based on your Investor Profile
|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 example, an investor with an income objective of capital growth and with high risk tolerance (that is, able to absorb potential loss of money) and with long-term investment horizon (at least 5 years) will benefit greatly by investing in an equity mutual fund.
Meanwhile, an investor whose income goal is merely to preserve capital and with relatively low risk tolerance (i.e., not willing to accept monetary loss) with a short-term investment horizon (a few months to one year) would find money market fund a more appropriate investment option.
How to Open a Mutual Fund Account (Step-by-Step Guide)
Ready to invest? Just follow this simple 5-step guide to begin your mutual fund investing journey.
Step 1: Choose a fund you want to invest in.
We provide below an alphabetical list of all currently available mutual funds in the country.
Choose the fund/s that you like and which match your investment goal and risk appetite, as explained in the earlier section on “3 things to consider before investing in Mutual Funds.”
Alphabetical List of Philippine Mutual Funds in 2020
|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, either 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.
At present, there are two companies that allow investors to directly invest in Mutual Funds online without the need for an investor to look for an agent. These two companies are COL Financial, which operates COL Fund Source, and First Metro Securities, which operates Fundsmart.
The two platforms are basically the same. Investors may open an account and, through the investor’s online account with these companies, can choose to invest in a variety of mutual funds offered in the Philippines. In this case, COL Financial and First Metro Securities themselves are the authorized mutual fund agents.
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.
Step 4: Fund your investment by paying in authorized payment centers.
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 that 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 in local banks that already have partnerships with the mutual fund or make online investments if allowed. 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.
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.
How you Make Money in Mutual Funds
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 these earnings, merely reduced by the fund’s operating charges and other expenses, are passed along as income to investors of the mutual fund. The value of each share of the mutual fund is called Net Asset Value per Share (NAVPS).
NAV is calculated daily based on the fund’s total asset value divided by the total number of outstanding shares of the fund. If the NAV is increasing, then that means mutual fund investors are making money from the fund. If the NAV is decreasing, then this means the fund is losing value and the investors are losing money.
Let’s see below how the NAVPS is actually computed.
How NAVPS is computed
If you’re still at a loss regarding how earnings in Mutual Funds are computed, don’t fret. It’s actually easy if you just follow our step-by-step guide so that you yourself can personally compute the gains (or losses) of your mutual fund investment.
Step 1: Determine the number of shares you own
You know this now: when you invest in mutual funds, you’re actually buying “shares” of the mutual fund company. Each share is priced using the NAVPS or the Net Asset Value per Share, 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 wish 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 invest 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 that day 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 simply have 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.
Mathematically, the computation steps are:
- Current NAVPS = P2.50
- Original NAVPS when you bought the shares = P1.75
- Difference in NAVPS prices = P2.50 – P1.75 = P0.75
- Number of Shares you Own = 57,142 (from Step 1 above)
- Profit = Difference in NAVPS price x Number of Shares you Own
- So your Total 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 (meaning, multiply!) 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 still “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) will also change. And 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:
- Current NAVPS = P2.00
- Original NAVPS = P1.75
- 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:
- Current NAVPS = P2.00
- 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.
Past Rankings of Best Philippine Mutual Funds
For the entire year 2019, we looked at the overall performance of all mutual funds in the Philippines and ranked below the top 10 mutual funds with the highest returns from January to December 2019.
*PinoyMoneyTalk’s Guide on How to Invest in Franchises, UITF, Mutual Funds, and ETF:
- 100 Best Franchises in the Philippines below P1 Million
- Best UITF in the Philippines
- UITF Investing Guide 101: How to Invest in Unit Investment Trust Funds
- Investing in Exchange Traded Funds (ETF)
(2019) Top 10 Overall Best Mutual Funds
|Rank||Mutual Fund / ETF||Type||Jan-Dec 2019 Return|
|1||Philam Bond Fund||Bond Fund||11.54%|
|2||Sun Life of Canada Prosperity Bond Fund||Bond Fund||11.18%|
|3||Sun Life Prosperity GS Fund||Bond Fund||10.47%|
|4||Soldivo Bond Fund||Bond Fund||8.16%|
|5||PAMI Horizon Fund||Balanced Fund||7.62%|
|6||Philequity Peso Bond Fund||Bond Fund||7.38%|
|7||First Metro Save and Learn Fixed Income Fund||Bond Fund||6.97%|
|8||Philam Fund||Balanced Fund||6.88%|
|9||NCM Mutual Fund of the Phils.||Balanced Fund||6.51%|
|10||Philam Managed Income Fund||Money Market Fund||6.29%|
Interestingly enough, in 2019, equity funds seem to have taken a backseat in terms of returns. Bond funds and balanced funds are the top performers, generating as much as double-digit returns while stock funds merely settled in the single-digit, just like the PSEi’s full-year 2019 return of 4.68%.
In addition, even money market funds — which are typically mandated to invest in securities with maturities of 1 year or less — managed to outperform stock funds. This only goes to show that investing in equity funds don’t give an assurance of relatively higher returns year after year after year.
If you’re already set to invest in a particular type of mutual fund, say, bond fund or balanced fund, but are still unsure which specific fund to invest in, then you’ll surely find useful our full ranking below of mutual funds by asset class.
Here’s a listing of all funds, categorized by asset class, showing individual fund performance (measured by gain or loss), from the beginning of January 2019 until the end of December 2019.
(2019) Best Equity Mutual Funds in the Philippines
|Peso Equity Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Philequity PSE Index Fund||5.72%||5.93%||6.43%||1.95%|
|2||Philippine Stock Index Fund||5.63%||5.85%||6.34%||1.90%|
|3||Sun Life Prosperity Philippine Stock Index Fund||5.25%||5.46%||6.07%||No Data|
|5||PAMI Equity Index Fund||4.58%||4.79%||5.79%||No Data|
|6||Sun Life Prosperity Philippine Equity Fund||4.21%||4.48%||5.45%||0.99%|
|7||First Metro Consumer Fund on MSCI Phils. IMI||3.95%||4.21%||No Data||No Data|
|8||Philam Strategic Growth Fund||3.93%||4.26%||4.32%||-0.01%|
|10||Philequity Dividend Yield Fund||3.02%||3.22%||4.69%||0.70%|
|11||First Metro Save and Learn Philippine Index Fund||2.39%||3.07%||0.06%||No Data|
|12||First Metro Save and Learn Equity Fund||1.36%||1.92%||4.23%||-0.59%|
|13||ALFM Growth Fund||0.33%||0.62%||3.07%||-0.43%|
|14||Climbs Share Capital Equity Investment Fund||0.21%||1.20%||No Data||No Data|
|15||Soldivo Strategic Growth Fund||-0.60%||-0.33%||3.07%||No Data|
|16||ATRAM Alpha Opportunity Fund||-4.33%||-2.68%||2.04%||-3.36%|
|17||ATRAM Philippine Equity Opportunity Fund||-5.31%||-4.94%||0.05%||-3.17%|
|18||MBG Equity Investment Fund||-10.98%||-12.80%||No Data||No Data|
|19||Philequity Alpha One Fund||No Data||No Data||No Data||No Data|
|20||Philequity MSCI Philippine Index Fund||No Data||No Data||No Data||No Data|
* Full-year performance, from January 2019 to December 2019.
(2019) Best ETF in the Philippines
|ETF||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||First Metro Phil. Equity Exchange Traded Fund||5.96%||6.18%||7.07%||2.88%|
* Full-year performance, from January 2019 to December 2019.
(2019) Best Dollar Equity Funds in the Philippines
|Dollar Equity Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Sun Life Prosperity World Voyager Fund||24.06%||25.73%||9.76%||No Data|
|2||ATRAM AsiaPlus Equity Fund||10.16%||11.70%||7.40%||1.00%|
* Full-year performance, from January 2019 to December 2019.
(2019) Best Balanced Mutual Funds in the Philippines
|Peso Balanced Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||PAMI Horizon Fund||7.62%||7.65%||3.50%||0.50%|
|3||NCM Mutual Fund of the Phils.||6.51%||6.59%||3.93%||1.28%|
|4||Sun Life Prosperity Dynamic Fund||6.18%||6.28%||3.95%||-0.12%|
|5||Sun Life of Canada Prosperity Balanced Fund||6.11%||6.36%||4.44%||0.82%|
|6||First Metro Save and Learn Balanced Fund||3.67%||4.11%||3.95%||-0.99%|
|8||Grepalife Balanced Fund||1.92%||2.04%||No Data||No Data|
|9||ATRAM Philippine Balanced Fund||-1.02%||-0.58%||0.28%||-1.26%|
|10||ATRAM Dynamic Allocation Fund||-5.11%||-5.04%||-1.39%||-3.95%|
|11||First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund||No Data||No Data||No Data||No Data|
|11||Sun Life Prosperity Achiever Fund 2028||No Data||No Data||No Data||No Data|
|11||Sun Life Prosperity Achiever Fund 2038||No Data||No Data||No Data||No Data|
|11||Sun Life Prosperity Achiever Fund 2048||No Data||No Data||No Data||No Data|
* Full-year performance, from January 2019 to December 2019.
(2019) Best Dollar Balanced Funds in the Philippines
|Dollar Balanced Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Sun Life Prosperity Dollar Advantage Fund||17.71%||18.15%||7.76%||4.06%|
|2||PAMI Asia Balanced Fund||13.01%||-0.14%||5.71%||1.19%|
|3||Sun Life Prosperity Dollar Wellspring Fund||11.92%||12.38%||4.61%||No Data|
|4||Cocolife Dollar Fund Builder||8.13%||8.38%||3.09%||2.01%|
* Full-year performance, from January 2019 to December 2019.
(2019) Best Bond Mutual Funds in the Philippines
|Peso Bond Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Philam Bond Fund||11.54%||11.54%||2.85%||1.77%|
|2||Sun Life of Canada Prosperity Bond Fund||11.18%||11.35%||4.90%||2.67%|
|3||Sun Life Prosperity GS Fund||10.47%||10.63%||4.45%||2.21%|
|4||Soldivo Bond Fund||8.16%||8.01%||1.52%||No Data|
|5||Philequity Peso Bond Fund||7.38%||7.75%||2.99%||1.42%|
|6||First Metro Save and Learn Fixed Income Fund||6.97%||6.81%||2.39%||1.58%|
|7||Cocolife Fixed Income Fund||4.64%||4.88%||5.21%||5.21%|
|8||Ekklesia Mutual Fund||4.44%||4.35%||2.46%||1.96%|
|9||ALFM Peso Bond Fund||4.18%||4.21%||2.83%||2.33%|
|10||Grepalife Fixed Income Fund||2.69%||2.80%||0.99%||-0.13%|
|11||ATRAM Corporate Bond Fund||2.27%||2.32%||0.02%||-0.50%|
* Full-year performance, from January 2019 to December 2019.
(2019) Best Dollar & Euro Bond Funds in the Philippines
|Dollar / Euro Bond Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Philam Dollar Bond Fund||10.65%||10.63%||3.70%||2.97%|
|2||Sun Life Prosperity Dollar Abundance Fund||10.43%||10.41%||3.06%||2.58%|
|3||ATRAM Total Return Dollar Bond Fund||7.16%||7.24%||3.24%||2.58%|
|4||Philequity Dollar Income Fund||5.87%||5.89%||2.31%||1.99%|
|5||PAMI Global Bond Fund||5.47%||17.84%||1.54%||-0.80%|
|6||ALFM Dollar Bond Fund||4.38%||4.43%||2.72%||2.77%|
|7||First Metro Save and Learn Dollar Bond Fund||4.03%||3.61%||1.46%||1.29%|
|8||ALFM Euro Bond Fund||3.31%||3.34%||1.65%||1.31%|
|9||Grepalife Dollar Bond Fund||1.12%||1.09%||-0.03%||0.13%|
* Full-year performance, from January 2019 to December 2019.
(2019) Best Money Market Mutual Funds in the Philippines
|Peso Money Market Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Philam Managed Income Fund||6.29%||6.35%||3.04%||1.71%|
|2||ALFM Money Market Fund||4.05%||4.11%||2.86%||2.18%|
|3||Sun Life Prosperity Money Market Fund||3.68%||3.74%||2.88%||2.34%|
|4||First Metro Save and Learn Money Market Fund||No Data||No Data||No Data||No Data|
* Full-year performance, from January 2019 to December 2019.
(2019) Best Dollar Money Market Funds in the Philippines
|Dollar Money Market Fund||Jan-Dec 2019 Return||1-Year Return||3-Year Return||5-Year Return|
|1||Sun Life Prosperity Dollar Starter Fund||2.09%||2.11%||No Data||No Data|
* Full-year performance, from January 2019 to December 2019.
Checking again the list of “Top 10 Best Performing Funds in 2019” infographic above, some of you might argue that there is no point comparing all mutual funds since equity mutual funds will always emerge as top performers.
That’s because these funds are invested in stocks and stocks, no doubt, generate the highest profits every year. Well, guess what, this is NOT true all the time!
In fact, we monitored the historical returns of mutual fund companies in the Philippines from 2016 to 2018, and our conclusion is that:
- 1. No single class of mutual funds — whether equity or balance or bond funds — was able to dominate returns year after year; and
- 2. Interestingly, there were years that Bond Funds, not Equity Funds, made more money; while in some years, Money Market Funds even managed to outperform Balanced Funds.
Top 10 Best Performing Mutual Funds (2018)
In 2018, the Philippine Stock Exchange index (PSEi) ended the year with a dismal performance of -12.76%. This meant an amount of P100,000 invested at the PSEi at the beginning of 2018 was just worth P87,240.00 — a loss of P12,760 — by the end of December 2018.
Unsurprisingly, equity mutual funds performed poorly, which is why the list of Top 10 Mutual Funds in 2018 is actually dominated by “Bond Mutual Funds” as seen in the table above.
Money market mutual funds, supposedly the most conservative category of funds, managed to have 3 funds in the Top 10 list — proof again that any type of fund can be the best performing given the prevailing sentiment in the market.
Also notice that only seven (7) funds, out of dozens of mutual funds in the list, managed to end the year with a positive gain. All the rest incurred a loss. This is the reason why, even though we’re showing the Top 10 best performing funds, the last 3 in the list obtained negative performance, but these are supposedly the best ones already with the least amount of losses compared to other funds.
Top 10 Best Performing Mutual Funds (2017)
The year 2017 was again a banner year for equity mutual funds in the Philippines. With the PSEi reaching all-time high levels that year, the list of Top 10 Best Mutual Funds in 2017 was all filled by equity funds.
|Rank||Mutual Fund||Type||2017 Return (in %)|
|1||Philequity PSE Index Fund||Equity Mutual Fund||24.71%|
|2||United Fund||Equity Mutual Fund||24.57%|
|3||Sun Life Prosperity Philippine Stock Index Fund||Equity Mutual Fund||24.56%|
|4||Philippine Stock Index Fund||Equity Mutual Fund||24.39%|
|5||PAMI Equity Index Fund||Equity Mutual Fund||24.08%|
|6||Philequity Fund||Equity Mutual Fund||23.01%|
|7||Sun Life Prosperity Philippine Equity Fund||Equity Mutual Fund||22.04%|
|8||First Metro Save and Learn Equity Fund||Equity Mutual Fund||22.02%|
|9||ALFM Growth Fund||Equity Mutual Fund||21.77%|
|10||ATRAM Alpha Opportunity Fund||Equity Mutual Fund||21.46%|
Top 10 Best Performing Mutual Funds (2016)
|Rank||Mutual Fund||Type||2016 Return (in %)|
|1||ATRAM Alpha Opportunity Fund||Equity Mutual Fund||11.71%|
|2||Cocolife Fixed Income Fund||Bond Mutual Fund||5.85%|
|3||ATRAM Philippine Equity Opportunity Fund||Equity Mutual Fund||4.86%|
|4||ATRAM Philippine Balanced Fund||Balanced Mutual Fund||3.39%|
|5||ALFM Peso Bond Fund||Bond Mutual Fund||2.06%|
|6||Sun Life Prosperity Money Market Fund||Money Market Mutual Fund||1.90%|
|7||Ekklesia Mutual Fund||Bond Mutual Fund||1.56%|
|8||Philam Bond Fund||Bond Mutual Fund||1.22%|
|9||ALFM Money Market Fund||Money Market Mutual Fund||1.13%|
|10||Soldivo Bond Fund||Bond Mutual Fund||0.51%|
And yet in 2016, it was again a different story for mutual fund companies. Bond mutual funds dominated the list that year, with 5 funds being included in the Top 10 list.
Meanwhile, only 2 equity funds managed to break into the Top 10, with 2 money market funds and 1 balanced fund completing the list.
With this, we hope we’ve helped you decide which mutual fund is best for you! Happy investing!
Source of Fund Performance: Philippine Investment Funds Association (PIFA)
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