Updated: April 26, 2016
What’s the best mutual fund in the Philippines? Which mutual fund should I invest in?
These are questions that new investors often ask me, to which I always answer this…
There’s no such thing as the best mutual fund in the Philippines, there’s only the best mutual fund that can help you achieve your financial goals.
Moreover, if it’s your first time to invest in a mutual fund, then it’s best to just go where it’s convenient for you.
My reply isn’t what most people are expecting to get, but believe me when I say that it is the most responsible answer that I can give — one which doesn’t set false expectations and helps you avoid losses.
What exactly do I mean? Well, let me explain.
First, let’s look at the best-performing peso equity mutual funds in the Philippines every year since 2011 until 2015:
|PESO STOCK MUTUAL FUND||2011 RETURN|
|First Metro Save and Learn Equity Fund||8.18%|
|Philequity PSE Index Fund, Inc.||8.17%|
|Philequity Fund, Inc.||6.11%|
|PESO STOCK MUTUAL FUND||2012 RETURN|
|Philippine Stock Index Fund Corp.||34.33%|
|Philequity Fund, Inc.||33.30%|
|Sun Life Prosperity Phil. Equity Fund||32.02%|
|PESO STOCK MUTUAL FUND||2013 RETURN|
|ATR KimEng Equity Opportunity Fund||4.02%|
|Philequity PSE Index Fund, Inc.||3.54%|
|Philippine Stock Index Fund Corp.||1.87%|
|PESO STOCK MUTUAL FUND||2014 RETURN|
|ATR KimEng Alpha Opportunity Fund||36.32%|
|Philequity Dividend Yield Fund, Inc.||29.80%|
|Philequity Fund, Inc.||27.79%|
|PESO STOCK MUTUAL FUND||2015 RETURN|
|United Fund, Inc.||-3.17%|
|Philippine Stock Index Fund Corp.||-3.45%|
|Philequity PSE Index Fund, Inc.||-3.88%|
What did you observe? What are the important lessons here?
The best-performing mutual fund is different every year.
It would be unfair to you if I just give you the top mutual fund for the year because that changes each time. Nobody can accurately predict what will happen in the stock market, that’s why there is no mutual fund that can monopolize the top spot.
And even if you make a similar tally for the top Philippine mutual funds based on their 5-year performance, you’ll have the different results for each year as well.
The names of mutual funds can be confusing.
Philequity PSE Index Fund, Inc. is a different mutual fund from Philequity Fund, Inc. just like ATR KimEng Equity Opportunity Fund is a totally different mutual fund from ATR KimEng Alpha Opportunity Fund.
It’s like SM Supercenter Pasig and SM Megamall — both are owned by the same corporation, but they are two totally different malls that cater to different shopping needs.
The annual returns are not that far apart.
Given that you can’t really know which mutual fund would come out on top each year, then just invest on any mutual fund that has shown good performance in the past — those that are consistently in the top 10.
The reason why the returns don’t differ that much is because after all, everyone’s investing in the same place, the Philippine stock market.
You must invest long-term to get good returns
When investing in mutual funds, especially equity or stock funds, it’s important that you hold your shares at least five years — but the longer, the better — because this allows you to gain through the ups and survive through the downs of the market.
If you can afford the time and energy required to profit from the highs and lows, then good for you. But if you’re too busy to time the market, then there’s no shame in just passively holding to your shares for many years. Just do cost-averaging and you’ll do well in the long-term.
Investing in Mutual Funds
Again, there’s no such thing as the best mutual fund, there’s only the best mutual fund that can help you achieve your financial goals. So always define your financial goals first before investing.
For short-term goals, low-risk funds that invest in the money market are your best choice. For medium-term goals, balanced funds offer the best opportunities for growth. And for long-term goals, equity mutual funds such as those above are your best bet.
Lastly, I’ve met a lot of people who delay investing simply because they’re too busy to go to a mutual fund office and open an account. They always say that they’ll invest when they find the time.
It is for this reason why I tell people to just invest where it is convenient for them.
All commercial banks offer Unit Investment Trust Funds, which are very similar to mutual funds. Alternatively, you can also call your insurance agent and ask if you can invest directly in their mutual funds.
You may not be investing in the top-performing mutual funds, but at least you are still investing, which brings you far ahead from those who are just letting their money get eaten by inflation in their savings account.
Photo credit: teegardin