December 2013 when I got interested with Mutual Fund. I was into reading books and personal finance blog back then. It is also the time when SavingsPinay started. Out of curiosity I applied for a Save and Learn Mutual Fund account under First Metro Asset Management Inc. aka FAMI.
Now I’m not an endorser and I don’t receive anything from FAMI. Based on my research its one of the longer and more stable financial company so it’s where I decided to invest.
This coming January 2016 I will be celebrating my second year as a mutual fund investor. I looked at my portfolio the other day and so happy with my progress. My main goal now is to diversify my investment into other investment vehicle.
As first installment I will give an ultimate guide on what Mutual Fund is all about. Don’t forget to share your thoughts in the comment section below.
[ANO] Define Mutual Fund
Mutual Fund is a pool of money professionally managed and invested in specific types of securities. Some call this indirect investment in the stock market since you let an expert financial company handle your money, buy your stocks and trade for you.
The Fund Manager who acts as the professional who handles your investment is guided by strict regulations. They monitor the value of your investments and see to it that the earning potential of the fund is maximized. They invest the fund’s capital to produce gains and income. A typical mutual fund portfolio (which I will show later in this post) is very structured and maintained to match the investment objectives stated in the prospectus of the investor.
Different Types of Mutual Fund
A mutual fund is said to be a good investment vehicle for beginners. Mutual Fund also offers variety. No matter what type of investor your are, there is a mutual fund that will fit your financial lifestyle.
Each mutual fund has different risks and rewards
You need to assess first what type of investor your are. Are you Conservative meaning have low risk tolerance? Are you Moderate meaning can take medium risk tolerance or are you Aggressive who have high risk tolerance?
Each mutual fund type is predetermined by an objective. Its assets, regions of investment and how the fund manager invest your money answers a fund goal.
On the fundamental level mutual funds are classified into four types
Money Market Funds and
Each fundamental classification is further narrowed by sub categories.
More about the different types of Mutual Fund on Day 2.
Example of a Mutual Fund Portfolio
[SINO] Is Investing in Mutual Fund Right For You?
To simply know whether a mutual fund is the right investment vehicle for you. Ponder upon the following:
You have no trust issues.
Mutual Fund works like a savings account that you need to fund. Then a professional fund manager will put your money in the market and make it earn for you. If you have issues entrusting your hard earned money to others then a mutual fund might not satisfy your investment cravings.
You are for immediate high returns.
Mutual Fund doesn’t make you an instant millionaire. You need to wait for your money to accumulate wealth in a slow bjt steady manner. For example, a capital of 25,000pesos invested in a Money Market Fund can be 2-3 million in 20-25years from now. (This depends on what type of mutual fund you invested). If you are willing to wait then mutual fund is for you.
You are a beginner.
Mutual Funds are one of the easiest way you can own shares/stock. You won’t be bombarded with hard financial terms. You don’t need to worry deciding what stocks to buy or to sell.
[SAAN] An Overview on Companies that Offer Mutual Fund
Have the largest market share in the mutual funds industry in the Philippines. Offers six different fund types that meet various investment objectives. You can invest in several funds for a more diversified portfolio.
ATR Kim Eng has always been part of the top performing mutual funds in the Philippines. They are focused on capital raising (equity and debt), debt restructuring, financial advisory, mergers and direct equity investment. Currently ATR Kim Eng Asset Management offers seven mutual funds.
FAMI was the very first financial company I trusted with my mutual fund investment. I read good reviews about the company and they are managed by Metrobank which is a long-standing reputable bank in the country. They offer five different mutual funds for investors.
This company is known for their life and general insurance but today its one of the leading asset and wealth managers in the Philippines. The company is known for its superior returns through active management, diversification and expertise. Philam plays a major role in the development of mutual fund in the country. They offer nine funds from different asst classes.
Philequity is an investment management company established to help achieve long-term financial objectives of investors by offering different mutual funds. It’s Philequity Peso Bond and Dollar Income Fund are reognized as best performing bond funds under the 5-year category. They currently offer six different funds.
Sun Life offers the Sun Life Prosperity Fund which is known for its simplicity, accessibility, affordability and returns. Opening is only 5,000pesos and has proven higher potential returns. There are nine different funds you can choose from.
Cocolife is another company that offers mutual fund. Currently Cocolife Asset Management have three types of funds namely: United Fund Inc. which is an equity fund. Cocolife Fixed Income Fund which is a bon fund. Cocolife Dollar Fund Builder which is a growth and income- interest funds. All Cocolife funds seek to generate long-term total returns from interest income and capital growth by investing in a diversified portfolio.
This is a very new fund for Filipinos. The fund is considered as moderate-to-high risk type and invests in shares of the companies listed in the primary and secondary boards of the Philippine Stock Exchange.
[KAILAN] When is the Best Time to Invest?
The best time to invest will be NOW. The earlier you invest your money, the better the return will be. Use any bonus, extra cash or most probably your 13th Month to build your portfolio income. Do something today that can change your life forever.
Example of the documents I read and filled up opening my account in FAMI
[BAKIT] Why Mutual Fund?
I had created a post before on the Advantages of Mutual Fund that I encourage you to visit. There I mentioned 7 things that separate mutual fund from other investment vehicles. To recap, mutual fund give small investors access to a professionally managed and extra-diversified portfolios that consists of equities, bonds, securities and stocks for a minimal investment capital. Most Mutual Fund can be easily opened with 5,000pesos investment.
Each shareholder participates proportionally in the gain and loss of the fund. This is why checking your fund performance is a must so you will be updated whether your fund is performing bad or not. Mutual fund shares are issued and can be purchased or redeemed via NAVPS. Read: What is NAVPS?
Beginners and Average investors will find mutual fund a convenient and affordable way of investing. Professional fund manager will help you in analyzing where to invest and implementing good investment strategy for better results.
[PAANO] How Do You Start Investing in Mutual Fund
Investing in mutual fund is easy. Depending on the financial company you will entrust your investments with, you will may need to do/to present the following.
1. Visit the website of your chosen mutual fund asset management company.
2. On their website you can easily find the page for Mutual Fund and/or Investment Products.
3. Read the differences of each mutual fund offerings. Select your fund based on your personal investment objectives, investment horizon and your risk profile.
3. Download the needed forms. This will depend on your chosen mutual fund asset management company.
Prospectus which is required and filed with the Securities and Exchange Commission. This document provides details about an investment offering as well as facts that an investor need to make an investment decision.
Account Opening Form which is required to be filled up for your information and other personal reference.
Investment Risk Profiling Questionnaire which will know your investment risk profiles and match you with the right companies to invest with.
4. Prepare your IDs.
5. Have you initial investment ready. Initial investment for a Mutual Fund account ranges from 5,000pesos to 10,000pesos.
6. Submit all your requirements. You may need to go to the nearest office or send through mail. Sun Life for example introduces an online facility that allows you to add, transfer and redeem shares anytime, anywhere. On FAMI I opened my account by submitting all the forms and requirements via courier.
7. Wait for your proof of purchase and/or statement of account to arrive.
Izza of SavingsPinay helps Filipinos bridge the financial literacy gap one content at a time by providing insights and tips on budgeting, saving, investing, side hustle and growing your net worth. Aside from this blog she also writes at www.izzaglinofull.com, a beauty and lifestyle blog for frugal Pinays and manages, www.izzagevents.com, a wedding and event business since 2011. For inquiries, topic suggestions or future collaborations email her email@example.com