A closer look at Philippine mutual funds, part 1By Randell Tiongson on September 12th, 2010
I was just reviewing the performance of local mutual funds courtesy of their helpful site, http://icap.com.ph. When you look at the year-to-date (YTD) performance of the equity funds, you will notice that nearly all funds trump the PSEi benchmark. The top 3 funds registered over 40% growth for their YTD numbers. It is also interesting to note that the 5 year YTD marks of the funds all beat the PSEi benchmark, with the exception of just 1 fund.
There is a view in many countries that investing in the index of the funds is the way to go as they perform better than most of the actively managed funds. However, this is not the case for the Philippine equity laced funds. By comparison, the top earner for the 5 year period is Phil Equity Fund, outperforming the index by as much as 6%.
Mutual funds are very convenient for those who do not have the competence and the time to manage their own stock portfolios. While many stock investors can claim to experience better return for their portfolios, the practicality of investing in the stock market through properly managed mutual funds (or UITF) is a better alternative to many – especially those who have better things to do than watch the market on a daily/weekly basis.
I am also encouraged by the relative good performance of many funds: the 5 year period showed many of the equity funds doing somewhere between 16 % to as much as 21% p.a. growth despite the disastrous financial crisis of 2008. Here’s another good thing: most local equity funds outperformed overseas funds! When you take into account the strengthening of the Peso, the growth of our local funds puts a greater distance to overseas funds. Investing in a USD denominated fund in 2005 will cost you about P53:$1 as compared to P45:$1 today. Not bad eh?
The big question in the minds of many: ‘will the local market continue with its good run in the months to come?’ …
… to be continued.