Best Mutual Funds to Invest in the Philippines in 2021

Pinoy Money Talk

Which mutual fund is the best mutual fund to invest in the Philippines?

Actually, it’s difficult to identify the best one given varying tastes and preferences of investors. So what we’ll do is hopefully give you enough information to help you arrive at a good decision regarding the best mutual funds that are suitable for you and worthy of your investment.

We invest with the hope that we’ll make money in the future. But this doesn’t mean we should expect to become millionaires after weeks or months of investing in mutual funds. It usually takes years — sometimes many, many years — before our investment can consistently and sustainably grow.

So to determine the best mutual funds in the Philippines, one criteria we can consider is consistency in returns. This refers to the ability of the fund to consistently deliver above-average returns in the long run.

Take, for example, two funds below: Fund A and Fund B. Which fund would you invest in?

Yearly PerformanceFund AFund BBenchmark Index
Year 112%30%15%
Year 26%5%10%
Year 3-10%-20%-12%
Year 4-5%-15%-8%
Year 52%-1%5%

Fund B wowed us with a staggering 30% gain in Year 1. This is double the 15% performance of the benchmark index that year. But what about succeeding years? Was it able to deliver consistent above-average returns? Not quite.

In Year 2, for example, while the benchmark index grew by 10%, it only managed to book a 5% return. Worst, in Year 3, while the benchmark posted a loss of -12%, Fund B lost a much bigger -20%.

Most investors typically prefer a fund that generates stable returns over one-time, big-time profits that cannot be sustainably achieved. Since most investors dislike volatility and unpredictability, despite Fund B’s “flash-in-the-pan” performance in Year 1, intelligent investors would choose Fund A instead of Fund B because of Fund A’s better performance over the long run.

Key lesson: Don’t be blinded by “flash-in-the-pan” returns, or high profits in the short run which cannot be duplicated in succeeding years. For us here in PinoyMoneyTalk, consistency is key. We personally prefer funds that can deliver consistent above-average long-term performance.

This is the reason why, in our list of best performing mutual funds below, we ranked Philippine mutual funds based on long-term returns, as measured by their five-year performance from January 2016 to December 2020.

This is our list of Top 10 mutual funds in the Philippines with the highest 5-year returns from 2016 to 2020.

Best Mutual Funds in the Philippines

Best Mutual Funds in the Philippines (based on 5-Year Returns)

RankMutual Fund5-Year GainType
1Cocolife Fixed Income Fund4.92%Bond Fund
2Sun Life of Canada Prosperity Bond Fund3.48%Bond Fund
3Philam Bond Fund3.06%Bond Fund
4Sun Life Prosperity GS Fund2.86%Bond Fund
5Philequity Peso Bond Fund2.83%Bond Fund
6ALFM Peso Bond Fund2.82%Bond Fund
7Philam Managed Income Fund2.72%Bond Fund
8Sun Life Prosperity Money Market Fund2.62%Money Market Fund
9Soldivo Bond Fund2.59%Bond Fund
10ALFM Money Market Fund2.58%Money Market Fund

*Note: Data were sourced from the industry association of fund managers, Philippine Investment Funds Association. We are not agents of or connected with any of the companies in this list. The list is not intended as a solicitation of investment or endorsement of any fund.

Some of you might argue that funds are not comparable with each other since each fund has varying investment mandates. That’s true.

A money market fund, for instance, is usually allowed to invest only in time deposits, government securities, or other investments that mature in one year or less. As such, they do not compare well to an equity fund investing in high-risk, high return stocks of a company listed in the Philippine Stock Exchange (PSE).

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 above with the highest long-term returns.

What about the best performing mutual funds for the entire year 2020?

For the year 2020, here are the 10 Best Performing Mutual Funds in the Philippines (Peso-denominated funds) that achieved the highest gains among all mutual funds from January to December 2020.

Best Performing Mutual Funds in 2020

Best mutual funds to invest in the Philippines
RankMutual Fund% Gain in 2020Type
1Soldivo Bond Fund8.06%Bond Fund
2ATRAM Dynamic Allocation Fund6.77%Balanced Fund
3Philequity Alpha One Fund6.52%Equity Fund
4Philam Bond Fund5.98%Bond Fund
5Philequity Peso Bond Fund5.62%Bond Fund
6Philam Managed Income Fund5.13%Bond Fund
7ATRAM Philippine Balanced Fund4.78%Balanced Fund
8Sun Life of Canada Prosperity Bond Fund4.24%Bond Fund
9First Metro Save and Learn Fixed Income Fund3.99%Bond Fund
10ALFM Peso Bond Fund3.67%Bond Fund

What about the comparative performance of mutual funds in their respective asset category? We summarize them below in the fund performance ranking by mutual fund type based on returns from the period January to December 2020.

Best Mutual Funds (Equity Fund) in 2020

RankPeso Equity Mutual Fund% Gain (Loss) in 2020
1Philequity Alpha One Fund6.52%
2MBG Equity Investment Fund-1.24%
3ATRAM Alpha Opportunity Fund-4.99%
4First Metro Save and Learn Equity Fund-7.26%
5Philippine Stock Index Fund-8.07%
6Philam Strategic Growth Fund-8.22%
7Philequity Fund-8.25%
8Philequity PSE Index Fund-8.28%
9Sun Life Prosperity Philippine Stock Index Fund-8.30%
10PAMI Equity Index Fund-8.65%
11United Fund-9.15%
12Philequity Dividend Yield Fund-9.22%
13ALFM Growth Fund-9.78%
14Philequity MSCI Philippine Index Fund-10.32%
15Climbs Share Capital Equity Investment Fund-10.48%
16First Metro Save and Learn Philippine Index Fund-10.99%
17First Metro Consumer Fund on MSCI Phils. IMI-12.68%
18Sun Life Prosperity Philippine Equity Fund-13.91%
19ATRAM Philippine Equity Opportunity Fund-14.82%
20Soldivo Strategic Growth Fund-15.56%

Best ETF in the Philippines in 2020

RankExchange Traded Fund (ETF)% Gain (Loss) in 2020
1First Metro Phil. Equity Exchange Traded Fund-8.04%

Best Mutual Funds (Dollar Equity) in 2020

RankDollar Equity Mutual Funds% Gain (Loss) in 2020
1Sun Life Prosperity World Voyager FundÊ21.33%
2ATRAM AsiaPlus Equity Fund16.97%

Best Mutual Funds (Balanced Fund) in 2020

RankPeso Balanced Mutual Funds% Gain (Loss) in 2020
1ATRAM Dynamic Allocation Fund6.77%
2ATRAM Philippine Balanced Fund4.78%
3Sun Life Prosperity Achiever Fund 20280.68%
4PAMI Horizon Fund-0.03%
5Philam Fund-0.14%
6First Metro Save and Learn Balanced Fund-0.17%
7Solidaritas Fund-1.32%
8Sun Life Prosperity Achiever Fund 2038-4.74%
9Sun Life Prosperity Achiever Fund 2048-6.05%
10Sun Life of Canada Prosperity Balanced Fund-7.51%
11Sun Life Prosperity Dynamic Fund-8.94%
12First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund-13.09%
13NCM Mutual Fund of the Phils.No data

Best Mutual Funds (Dollar Balanced) in 2020

RankDollar Balanced Mutual Funds% Gain (Loss) in 2020
1Sun Life Prosperity Dollar Advantage Fund15.40%
2PAMI Asia Balanced Fund13.66%
3Sun Life Prosperity Dollar Wellspring Fund6.50%
4Cocolife Dollar Fund Builder2.41%

Best Mutual Funds (Bond Fund) in 2020

RankPeso Bond Mutual Funds% Gain (Loss) in 2020
1Soldivo Bond Fund8.06%
2Philam Bond Fund5.98%
3Philequity Peso Bond Fund5.62%
4Philam Managed Income Fund5.13%
5Sun Life of Canada Prosperity Bond Fund4.24%
6First Metro Save and Learn Fixed Income Fund3.99%
7ALFM Peso Bond Fund3.67%
8Ekklesia Mutual Fund3.27%
9Sun Life Prosperity GS Fund3.17%
10Cocolife Fixed Income Fund3.10%
11ATRAM Corporate Bond Fund-0.09%

Best Mutual Funds (Dollar & Euro Bond) in 2020

RankDollar & Euro Bond Mutual Funds% Gain (Loss) in 2020
1ATRAM Total Return Dollar Bond Fund6.06%
2Philam Dollar Bond Fund5.50%
3Philequity Dollar Income Fund3.35%
4ALFM Dollar Bond Fund3.31%
5First Metro Save and Learn Dollar Bond Fund3.10%
6Sun Life Prosperity Dollar Abundance Fund1.52%
7PAMI Global Bond Fund-0.08%
8ALFM Euro Bond Fund-0.28%

Best Mutual Funds (Money Market Fund) in 2020

RankPeso Money Market Mutual Funds% Gain (Loss) in 2020
1ALFM Money Market Fund3.16%
2Sun Life Prosperity Money Market Fund2.50%
3First Metro Save and Learn Money Market Fund2.12%

Best Mutual Funds (Dollar Money Market) in 2020

RankDollar Money Market Mutual Funds% Gain (Loss) in 2020
1Sun Life Prosperity Dollar Starter Fund1.36%

Best Mutual Funds (Feeder Fund) in 2020

RankPeso Feeder Mutual Funds% Gain (Loss) in 2020
1Sun Life Prosperity World Equity Index Feeder FundNo data

Best Mutual Funds (Dollar Feeder Fund) in 2020

RankDollar Feeder Mutual Funds% Gain (Loss) in 2020
1ALFM Global Multi-asset Income Fund-1.01%

Are Equity Funds always the best investment?

One would expect that Equity Funds would always yield the highest return compared to all asset classes. That’s because equity funds are invested in stocks and stocks, no doubt, generate the highest profits every year. Right?

Well, guess what, this is NOT true all the time!

Stocks and equity funds typically underperform during times of economic crises which we’re seeing at present because of the COVID-19 pandemic.

As investors flee stock markets, funds flow into the contrarian and more conservative asset class: Fixed Income instruments, such as Bonds. This explains why Bond Funds typically outperform Equity Funds during times of market upheavals.

In fact, based on our monitoring of the returns of mutual funds in the Philippines in the past years, we found two interesting conclusions:

1. No single type of mutual funds (equity or balanced or bond funds) was able to consistently achieve the highest returns year after year after year; and

2. There were years that Bond Funds made more money than Equity Funds, while in some years, Money Market Funds even outperformed Balanced Funds!

These insights were based on the following rankings of Philippine mutual funds with the highest gains in the past years.

As you can see, during some years of good economic growth, Equity Funds typically dominate other types of mutual funds. But during times of economic recession, Bond Funds and even Money Market Funds appear to be more profitable compared to Equity Funds.

Top 10 Mutual Funds with Highest Gains in 2019

RankMutual Fund / ETFType2019 Profit (Loss) %
1Philam Bond FundBond Fund11.54%
2Sun Life of Canada Prosperity Bond FundBond Fund11.18%
3Sun Life Prosperity GS FundBond Fund10.47%
4Soldivo Bond FundBond Fund8.16%
5PAMI Horizon FundBalanced Fund7.62%
6Philequity Peso Bond FundBond Fund7.38%
7First Metro Save and Learn Fixed Income FundBond Fund6.97%
8Philam FundBalanced Fund6.88%
9NCM Mutual Fund of the Phils.Balanced Fund6.51%
10Philam Managed Income FundMoney Market Fund6.29%

In 2019, equity funds seem to have taken a backseat in terms of returns. Bond funds and balanced funds were 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 typically invest in securities with maturities of 1 year or less — outperformed stock funds.

This only goes to show that investing in equity funds doesn’t give an assurance of higher returns year after year after year.

Top 10 Mutual Funds with Highest Gains in 2018

RankMutual FundType2018 Profit (Loss) %
1Cocolife Fixed Income FundBond Mutual Fund5.25%
2Sun Life Prosperity Money Market FundMoney Market Mutual Fund2.79%
3ALFM Money Market FundMoney Market Mutual Fund2.73%
4Philam Managed Income FundMoney Market Mutual Fund2.08%
5ALFM Peso Bond FundBond Mutual Fund1.86%
6Ekklesia Mutual FundBond Mutual Fund1.34%
7Philequity Peso Bond FundBond Mutual Fund0.25%
8First Metro Save and Learn Fixed Income FundBond Mutual Fund-0.33%
9Sun Life of Canada Prosperity Bond FundBond Mutual Fund-0.44%
10Sun Life Prosperity GS FundBond Mutual Fund-0.70%

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 Mutual Funds with Highest Gains in 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 with double-digit gains.

RankMutual FundType2017 Profit (Loss) %
1Philequity PSE Index FundEquity Mutual Fund24.71%
2United FundEquity Mutual Fund24.57%
3Sun Life Prosperity Philippine Stock Index FundEquity Mutual Fund24.56%
4Philippine Stock Index FundEquity Mutual Fund24.39%
5PAMI Equity Index FundEquity Mutual Fund24.08%
6Philequity FundEquity Mutual Fund23.01%
7Sun Life Prosperity Philippine Equity FundEquity Mutual Fund22.04%
8First Metro Save and Learn Equity FundEquity Mutual Fund22.02%
9ALFM Growth FundEquity Mutual Fund21.77%
10ATRAM Alpha Opportunity FundEquity Mutual Fund21.46%

Top 10 Mutual Funds with Highest Gains in 2016

RankMutual FundType2016 Profit (Loss) %
1ATRAM Alpha Opportunity FundEquity Mutual Fund11.71%
2Cocolife Fixed Income FundBond Mutual Fund5.85%
3ATRAM Philippine Equity Opportunity FundEquity Mutual Fund4.86%
4ATRAM Philippine Balanced FundBalanced Mutual Fund3.39%
5ALFM Peso Bond FundBond Mutual Fund2.06%
6Sun Life Prosperity Money Market FundMoney Market Mutual Fund1.90%
7Ekklesia Mutual FundBond Mutual Fund1.56%
8Philam Bond FundBond Mutual Fund1.22%
9ALFM Money Market FundMoney Market Mutual Fund1.13%
10Soldivo Bond FundBond Mutual Fund0.51%

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.

As mentioned earlier, there’s no perfect type of mutual fund that can achieve above-average returns year after year after year. It is our task as investors to constantly monitor the performance of our investment and to tweak our investment choices based on the fund performance and our risk appetite.

With this comprehensive and extensive article, we hope we’re able to help you decide which mutual fund is appropriate for you! Happy investing!

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Pinoy Money Talk is an educational website about money, banking, investments, and personal finance which started in 2005. Its group of five writers consists of one equity research analyst, one fintech startup owner, one finance educator, and two investment professionals.