2015 Outlook, part 2By Randell Tiongson on January 8th, 2015
Kicking off this 2015 Outlook series is the views of one the country’s most respected investment expert, Marvin V. Fausto. Mr. Fausto was formerly the Chief Investment Officer of the Philippine’s largest bank and also the largest funds. His decades long experience in fund management makes his investment views sought after. He and his wife Rose Fres Fausto has also embarked an advocacy with financial education for families.
The 2015 Outlook of Marvin V. Fausto
2014 turned out to be quite within people’s expectations with the general trend of the economy growing above historical averages and the financial instruments behaving towards the path most analysts expect. GDP growth should end above 6%, interest rates inched up while the stock market did not disappoint exceeding expectations with the PSEi increasing by more than 22%.
2015 however may bring in mixed expectations. Despite general positive long term outlook both in the domestic and the now growing positive sentiment in the global environment, the bottlenecks in stimulus spending experienced by government towards the latter part of 2014 and the coming Philippine elections in 2016 may keep investors’ on the sidelines waiting for how the economic variables pan out before deploying the increasing liquidity in peoples bank accounts.
Investment deployment will be data dependent and market sensitive. Should the economy falter and bring in below average GDP growth, the premium that investors give to the Philippines may be given a second look and will be adjusted accordingly.
On the other hand, the extent of the effects of the decline in oil prices in commodity raw material inputs that may keep inflation within the BSP’s expectations could leave interest rates steady despite the increasing expectations of higher US interest rates.
Domestic bond investors therefore may have better opportunities this year than during the last with government and corporate bond prices moving within a range given the favorable benign inflation expectations. The stock market, on the other hand, will present investment opportunities both for trading and long-term investing. With valuations remaining above historical levels and as trading volumes decline, stock market traders should remain selective and increase positions during market downturns and reduce holdings during market rallies. Long-term investors may well deploy heavier on declines and buy consistently and regularly using the cost averaging method as the stock market rise.
2015 should present opportunities with investors cognizant of the events that unfold. As we enter the demographic sweet spot this year that many are anticipating to be the start of a long period of above average growth for the Philippines, people should deploy their cash wisely and invest prudently. With information available faster through the internet, people should continue doing their research and reserve some attention to set aside funds more specifically with targeted objectives for emergencies, for future financial goals, and even for retirement. Apportion tactical positions for each goal matching risk appetite with investment instruments horizon.
Let 2015 be the year goals are set and wisely implemented. Happy investing!
Marvin V. Fausto is the former Senior Vice President and Chief Investment Officer of the country’s largest bank, BDO Universal Bank and in charge of the Investments unit managing over P700 Billion under the BDO Trust Banking Group. He recently took his early retirement having worked for over 30 years in the fund management industry and is now embarking on a new venture as a consultant to COL Financial to launch the first fund supermarket in the country making funds available online and easily accessible to everyone.
He held the position as head of the Trust Banking Group of Equitable PCI Bank from 2002 to 2007 primarily responsible for its overall business and operations. He also held the position of Vice President and Investments Head at Citytrust Banking Corporation. He started his career as an analyst at the former Far East Bank & Trust Co.
After having served as President and director, Mr. Fausto is currently a Board Adviser to the Trust Officers Association of the Philippines, the umbrella organization of the Trust Industry. He was also the Founding President and current Board adviser of the Fund Managers Association of the Philippines. He is also a member of the Board of Advisers of the CFA Society of the Phils.