Mutual Funds Philippines - What is and How to apply?

What are mutual funds?

Simply put it as a collection of money from different individuals and institutions managed by a group fund managers. They invest the money in stocks, bonds, fixed return securities and other investments.

Some of the popular Mutual Fund companies in the Philippines are the following:
- Philequity Management Inc
- First Metro Asset Management Inc.
- Philam Asset Management Inc
- Sun Life Financials Philippines
- ALFM (Affiliated with Ayala BPI)
- ATR Kim Eng Asset Management

The complete list as well as performances of mutual funds in the Philippines are shown at the official website of the Philippine Investment Funds Association (PIFA).

How much is the return?

The quick answer depends on many factors. It is not fixed nor guaranteed. The following are some of the major factors affecting mutual fund performances.

Type of Fund

There are basically three types of mutual funds in the country: Stock Funds, Bond/Money Market Funds, and Balanced Funds

Stock or Equity Funds are invested in the Philippine Stock Exchange (PSE). The fund managers decides what stock to buy, how much to buy and when to sell it. Stocks prices are volatile. The loss or gain can be very large. With that, Stock Funds are recommended for those who can take the risk for a potentially high return.

Bond and Money Market Funds are invested in fixed-return investments like government bonds. Because they are relatively low-risk, bond/money-market funds are usually low risk but low returns as well. With that, this type of mutual fund is recommended for those whose risk tolerance is low.

Balanced Funds on the other hand are funds invested in both high risk (stocks) and low risk (bond) investments. The proportion though depends on the fund manager. For example, it can be 80% stock and 20% bonds.

The details of each specific mutual fund varies from company to company. To know more about that, please read the prospectus document of each fund.

The Fund Manager

Since they are the ones deciding which investments they will put the money, the performance of the fund depends on their performance as well. Well experienced fund managers tends to perform better. With that make sure to check the historical performance of the fund. Take note of the fund performance especially on times of economic difficulties.

Is it legal? Is it fraud free?

Yes, it is legal. The Securities and Exchange Commission (SEC) regulates mutual funds in the Philippines. Is it fraud free? Not absolutely. But since the current players were reputable companies, the risk of fraud is very low.

How to Apply?

Contact the mutual fund company. Most mutual fund companies have both in-house (employees) and third-party agents. If you contact a third-party agent, make sure that he is really a genuine agent. Ask them help to explain how your money will be used.

You typically need to fill-up some forms and submit identification documents. You also need to pay the initial investment amount (see details below).

Make sure to ask about "holding period" or the minimum time when you are not allowed to withdraw without penalty fees. Also ask about sales load, annual maintenance fees, management fees and other charges. These fees are paid to the fund managers and other employees that run the company operations.

Lastly, ask how to redeem your investment. The procedure and requirements varies between each mutual fund companies.

How Much is the Minimum Investment?

Some mutual funds require only 5000 Pesos as a start-up investment and multiples of 1000 Pesos for additional investments.

English: The Mutual Fund Store office, 37308 S...