A Byte of my 2.2-lb Brain

Just sharing stuff…

Where to begin on Mutual Funds

I’ve been receiving quite a handful of queries about investing in mutual funds (MF). In my last post on MFs, I said that “if you want to have equity exposure (which you should) and yet do not want to go mental with all those stock charts and disclosures, I strongly urge investing in mutual funds.”

Some of the FAQs I received that I think are quite relevant especially for those of you who are very keen on investing in MFs are:

    1. What type of MF is right for me?

      Well, it depends on your risk apetite. Basically, there are four types of MF: equity (essentially the stocks), balanced, bond and money market funds. The bond and money market funds are for the more conservative investors since they fend for capital preservation. For instance, the bonds funds invest in… bonds, which include both T bills that are issued by the government and commercial papers issued by established companies in the country. On the other hand, equity funds are more aggressive in terms of growth — investing in the PSE. When you’re invested in equity funds you are also invested in the stock market (I can so hear myself saying, “you don’t say?”). 🙂 Finally, as the name implies, a balanced fund is where you are invested in both bonds and stocks. Given the current performance of the Philippine market and its potential, I would definitely go for either the equity fund or the balanced fund.

    2. Which MF company should I invest in?

      According to the PIFA (Philippine Investment Funds Association), there are 30 MFs in the country that are invested in Peso securities (Equity: 8; Balanced: 7; Bonds: 10; Money Market: 5). Since I’m only recommending either the equity fund or the balanced fund, let’s just look at the performances of the different funds in those sectors as reported by the PIFA.

      STOCK FUNDS (as of 1Q of 2012, 4/18/2012)

      YTD Return (%) 1 yr. (%) 3 yr. (%) 5 yr. (%)
      Philam Strategic Growth Fund, Inc. 23.45 23.14% 37.82% 13.91%
      Philippine Stock Index Fund Corp. 20.33 22.53% 35.5% 9.59%
      First Metro Save and Learn Equity Fund,Inc. 19.16 28.31% 43.21% 15.93%
      Philequity Fund, Inc. 18.50 22.17% 41.03% 14.73%
      Sun Life Prosperity Phil. Equity Fund,
      17.48 14.62% 30.95% 10.37%
      ATRKE Equity Opportunity Fund, Inc. 17.04 14.85% 31.77% 8.15%
      Philequity PSE Index Fund Inc. 15.90 21.81% 34.69% 12.7%
      United Fund, Inc. 7.46 3.75% 14.53% 7.04%

      BALANCED FUNDS (as of 1Q of 2012, 4/18/2012)

      YTD Return (%) 1 yr. (%) 3 yr. (%) 5 yr. (%)
      ALFM Growth Fund, Inc. 24.55% 24.89% 42.13% n.a.
      GSIS Mutual Fund, Inc. 22.29% 20.08% 31.95% 13.07%
      Philam Fund, Inc. 21.9% 22.56% 32.7% 12.98%
      Bahay Pari Solidaritas Fund, Inc. 19.95% 18.63% n.a. n.a.
      NCM Mutual Fund of the Phils., Inc 19.56% 21.31% n.a. n.a.
      First Metro Save and Learn Balanced Fund,Inc. 17.92% 26.67% 39.83% n.a.
      ATRKE Philippine Balanced Fund, Inc. 13.34% 12.38% 21.86% 6.35%
      Optima Balanced Fund, Inc. 12.83% 18.14% 21.01% 8.89%
      Sun Life Prosperity Balanced Fund, Inc. 12.81% 11.89% 20.97% 8.91%

    Looking at the table, personally, I would go for First Metro Securities’ Funds (both equity and balanced). What is the minimum initial deposit required? Only ₱5,000. 🙂

    Happy investing!

    One comment on “Where to begin on Mutual Funds

    1. Pingback: Mutual Funds as of Jan 02, 2012 « A Fledgling Iskâ "Techno-Fundamentalist"

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This entry was posted on April 20, 2012 by in Investing, Mutual Fund and tagged , , .
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