How to EASILY invest in the Philippine stock market

James Ryan Jonas

Here’s the bitter truth in stock trading: It’s not easy to consistently make money and to win in the stock market on your own.

With hundreds of stocks available in the Philippine Stock Exchange (PSE) and thousands of jockeys and tsupiteros who can manipulate prices, it sometimes is better to just rely on a credible and dependable source of stock recommendations.

Arguably one possible source of such recommendations is First Metro Securities, the brokerage arm of the Philippines’ second largest bank, Metrobank, which developed four (4) Model Stock Portfolios.

What is a Model Portfolio?

A “model portfolio” is a grouping of stocks developed with a specific investment goal in mind, which can merely be copied and followed by investors when deciding which stocks to buy and own.

First Metro Securities created Model Portfolios catering to various types of stock investors. In the first three months of the year, 3 out of the 4 model portfolios were able to beat and outperform the performance of the 30-company Philippine Stock Exchange index (PSEi)!

While the PSE index recorded a loss of 4.17% from January to March 2018, one top Model Portfolio — amusingly called “Unloved” — surged almost 8%. This means that if you invested in the PSEi from the start of the year, you’d have lost money but, if you followed the “Unloved” Model Portfolio of First Metro Securities, you’d beat the PSEi and gained a profit of 8% instead!

See the comparative results below:

Model Portfolios for stock investors

What are the 4 Model Portfolios developed by First Metro Securities? They are:

1. Riding the Momentum

This stock portfolio is for investors looking to invest in well-established companies with sustained profitability and high earnings expectations. This model portfolio is comprised of high-growth stocks with high Price-Earnings (P/E) ratio and quality Earnings per Share (EPS) growth.

2. Value Play

This model portfolio includes stocks that are undervalued by the market but able to provide high return to shareholders. If you’re looking for stocks with low Price-to-Book value but high Return on Equity (ROE), this model portfolio is for you.

3. Yield Seekers

This model portfolio is for those into stock price appreciation, but more importantly, above-average recurring dividend yields. The stocks included in the “Yield Seekers” portfolio have high Dividend Yields and high Dividend Coverage Ratio (DCR).

4. Unloved

Finally, the “Unloved” stock portfolio is comprised of stocks that could potentially generate high earnings but are currently underrated by the market. These stocks have high EPS growth and low Price-to-Earnings (P/E) ratio.

These model portfolios certainly cater to various investors, with different investment goals and risk appetite. In terms of performance, as mentioned earlier, 3 of the 4 model portfolios were able to outperform the PSEi, with the Unloved Model Portfolio gaining almost 8% while the PSEi lost 4% in the same period!

How to Use the Model Portfolio

Once you’ve chosen a portfolio above which suits your investment personality, you may simply copy the component-stocks in that portfolio. This means mimicking or buying all stocks included in the model portfolio. First Metro Securities updates the model portfolios every week, so make sure you regularly check the latest portfolios to see which stocks have been added or removed.

If you want to know the latest stock composition of the 4 Model Portfolios, see PinoyInvestor’s Stock Picks and Model Portfolios section.

Happy smart investing!

James Ryan Jonas teaches business management, investments, and entrepreneurship at the University of the Philippines (UP). He is also the Executive Director of UP Provident Fund Inc., managing and investing P3.2 Billion ($56.4 Million) worth of retirement funds on behalf of thousands of UP employees.