Pinoy Fund Runners

There are several types of mutual funds offered in the Philippines. But for this article, I will only tackle on funds that are commonly available in the Philippine market.





Common Types:

Historical returns:

The historical returns showed below are based on historical performance of Sun Life Prosperity Funds.

	Prosperity Philippines Equity Fund	Prosperity Balanced Fund	Prosperity Bond
2001	-10.05%	-1.44%	10.54%
2002	-17.68%	-12.76%	8.40%
2003	39.84%	31.51%	8.42%
2004	20.18%	19.09%	7.89%
2005	11.35%	9.98%	11.05%
2006	44.00%	34.29%	11.96%
2007	20.58%	17.21%	2.42%
2008	-37.60%	-23.73%	1.65%
2009	43.50%	21.70%	5.67%
2010	41.24%	30.67%	7.85%

You might be scared of investing on Equity or Balance due to the negative values. The negative values do not really mean that your investment will zeroed out. The negative values mean that the unit values you bought on the previous year, devaluated. It is just considered as "paper loss". The number of units that you bought is still intact.

In fact, if the unit values went down, for just an example "due to recession", you must take advantage of that one by buying MORE mutual fund units, because the unit values are lower.

I highly recommend investing on Equity fund for your long term investment such as Children's educational fund or retirement fund. I will show on the next table why equity fund is superior to any other fund if you are thinking long term.

i.e. Initial investment =10,000

Period = 10 years


Alas! At the end of the tenth year, Equity Fund showed it's superiority over other funds.

Which fund is best for me?

That really depends on your risk appetite, your current financial situation and your financial objective. Always remember the simplest investment principle: "The higher the risk, the higher the potential return"

What do you recommend?

If you don't have any intention to use any of your investment on the next ten years, I highly recommend for you to maximize return of investment through Equity Fund. If you are about to use your investment, for just an example 5 years before your child goes to college or 5 years before your retirement, switch or transfer your funds to a more conservative type of investment like Bond Fund. This will protect your investment from any market fluctuations while you are doing periodic withdrawals on your investment.

What are the other MF available in the market?

• GS Fund – Pure Government securities or loans. Lower returns than bond fund.
• Money Market Fund – Short-term loans or commercial papers issued by corporations. Investment returns is almost as low as the bank.
• Foreign Currency – Consists of either corporate stocks or foreign government loans. For me, I don't recommend investing on dollars. It's growth is just being nullified by it's devaluation.
  

If you have more questions about MF, feel free to email me or set an appointment to enlighten you in detail about this investment.