MODULE 3

How to Invest in and Earn from Mutual Funds in the Philippines

One way to prepare for financial security in the future is to find the right investment. If you're looking for a beginner-
friendly way to let your money grow through passive income, consider mutual funds in the Philippines. A fund manager
will handle your portfolio and make investment decisions on your behalf.
4 Types of Mutual Funds in the Philippines
You can choose to invest in one or a combination of mutual fund types. Each type caters to various investment
timeframes, financial goals, risk appetite, and instruments where the pooled funds are invested.

Bond Funds

Also known as a debt fund, you use this type of mutual fund for beginners to invest in bonds and other debt instruments
to generate monthly income for investors. In general, bond funds only require a minimum investment.
This type of mutual fund is ideal for investors with low to moderate-risk appetites who want to protect their savings
against inflation. Bond funds may also offer higher profits compared to time deposits and money market investments.

Equity Funds

These are typically used to invest in stocks. Equity funds invest in the shares of different companies to make a profit.
Some equity funds may even target specific sectors for stock investment.
This type of mutual fund investment is perfect for investors who have a higher risk appetite and want a longer timeframe
for investment. If you are a seasoned investor with experience in the Philippine Stock Market (PSE), equity funds may
be ideal for you.

Money Market Funds

This type of mutual fund only invests in high-quality, short-term instruments like cash and cash-equivalent securities.
In general, money market funds invest in certificates of deposits (CDs), treasuries, bankers’ acceptances, and repurchase
agreements.
Are you a mutual funds beginner with a lower risk appetite? This mutual fund might be right for you. Because money
market funds carry lower risks, the returns can be quite small as well.

Balanced Funds

Balanced funds are a mix of bonds, stocks, and other securities. They're also known as hybrid funds because they aim
to make a profit by investing in a combination of various mutual fund types. Typically, balanced funds are composed of
60% stocks and 40% bonds.
Typically, balanced funds are ideal for investors with low to moderate appetite for risk who want to earn a bit more than
what bond funds offer. The investment timeframe for this type of mutual fund is three to five years.
How Do Mutual Funds Differ From Other Investments?

Mutual Funds vs UITF

In the Philippines, mutual funds are similar to unit investment trust funds (UITFs). They’re both a pool of investments
where each fund contains different holdings as compared to stocks. These two investment vehicles differ in the
companies that offer them and the government agencies that regulate them.
Insurance companies typically manage mutual funds, while banks handle UITFs. The Securities and Exchange
Commission (SEC) regulates mutual funds companies in the Philippines. For UITFs, the regulatory body is the Bangko
Sentral ng Pilipinas (BSP).
In addition, the difference between mutual funds and UITFs is that you buy shares with the former and units with the
latter. Buying shares of a mutual fund makes you a shareholder of the investment company because you're buying part
of the company. That's not the case when you buy UITFs.
 Mutual Funds vs Stocks

You may think that mutual funds and stocks are the same. However, from a financial expert’s point of view, mutual
funds and stocks technically differ in the way your money is invested.
In stocks, you invest your money in a single company, while a mutual fund offers more diversification by bundling
many company stocks into one investment.[1]
Mutual funds in the Philippines allow you to put your money in different assets from different companies that earn you
shares and generate profits and losses.

Stocks Mutual Funds

Shares in one company Shares in a pool of funds

Can be owned and managed by the investor Managed by an investment manager or an asset management
alone company and owned by different investors

Own shares in a company Own shares in a pool of fund

Risk: Low due to professional management is done by the fund

Risk: High
manager

Company's performance affects the money Skills of fund managers and behavior of investors affect the
you’ve invested money you’ve invested

Value of profit is based on the current price of Value of profit is based on the net asset value of the investment
the share in the stock market portfolio

Mutual Funds vs ETFs

An exchange-traded fund or ETF is similar to mutual funds in the Philippines. Both ETFs and mutual funds are handled
by asset management professionals. In both funds, you put your money in a “basket” of investments.
However, unlike mutual funds, ETFs require your investment manager to get into contractual relationships with
authorized participants or financial institutions who are actually large broker-dealers.

Mutual Funds and ETFs Similarities Mutual Funds and ETFs Differences

Mutual funds require minimum investments, while

Funds are managed by an asset management company
ETFs allow you to purchase even only one share

ETFs cost less. Mutual funds charge an internal cost of

Money is spread across different companies or assets
at least 1%

Mutual funds are traded once a day, while ETFs are

Accommodate low investments
traded throughout the day

You can withdraw your money after calculating the net Reinvesting your assets is easier in mutual funds.
asset value, but you’ll need to pay fees even when your Reinvestment in ETFs can be done only if the broker
investment undergoes losses offers a dividend reinvestment plan
How to Earn Money from Mutual Funds in the Philippines
The return on investment of mutual funds varies depending on the price of a fund. That said, you can earn a profit from
mutual funds in the Philippines in three ways—dividends, capital gains, and increased net asset value (NAV).

Dividends

A mutual fund can earn profits from dividends on stock or interest in assets. The mutual fund company will then pay
you most of the income, minus the expenses incurred by the company.
With a mutual fund with dividends in the Philippines, you can receive payment via check or choose to reinvest the profit
to purchase more shares.

Capital Gains

When a fund sells securities that have increased in value, the fund will earn a capital gain. At the end of the year, the
mutual funds company will then distribute these gains, minus any capital losses, to their investors.

Increased Net Asset Value

The net asset value (NAV) represents a fund’s per unit market value. [2] If the market value of the fund’s portfolio rises,
then the value of the fund and its shares also increase. The higher the NAV, the higher your investment’s value is.
Take note that your potential earnings are subject to fees and other charges as stated in your chosen mutual funds
company’s terms and conditions.
How to Invest in Mutual Funds in the Philippines
Here are some of the steps to take if you want to learn how to invest in mutual funds in the Philippines:
Step 1: Evaluate Your Goals
Before deciding to invest in mutual funds, analyze what your financial goals are. Ask yourself why you want to start
mutual fund investing. What's your risk appetite? How much money are you willing to invest? This will help you
evaluate whether mutual funds are the best investment vehicle for you or not.
Step 2: Choose the Right Company That Fits Your Needs
Once you’re sure that mutual funds are the way to go, research mutual fund companies in the Philippines. Make sure
these companies are regulated by the SEC.
Several companies tied to banks and insurance firms can help you get started in mutual funds. You can visit them in
person to inquire about investment opportunities or explore their websites and compare their offerings against each
other.
You can also visit the Philippine Investment Funds Association (PIFA) website to find the best company to invest in
based on its NAVPS performance. NAVPS stands for Net Asset Value Per Share, which represents a mutual fund’s price
per share.
Step 3: Talk to Your Agent
When you’ve finally chosen the best company that will manage your investment, an agent will be assigned to answer
your questions. List down all your questions before meeting with the agent so that you won’t forget them.
The agent will help you find the best type of mutual fund for your needs. He or she will be there to guide you from
investing to monitoring your investment.
Step 4: Pick the Best Type of Mutual Fund for You
The next step is choosing the kind of mutual fund you would like to invest in. Consider your financial goal, risk appetite,
and preferred investment timeframe when picking one. Several different accounts are available locally and carry various
kinds of risks and returns.
Step 5: Submit the Requirements
Answer the Investor Profile Questionnaire, which will help determine what kind of investor you are and your risk
tolerance. You'll need to fill up a personal information sheet and submit valid IDs. Also, you'll fill up an Order Ticket to
determine how many shares you plan to purchase.
Step 6: Track Your Investment
Once you’re all set, make sure to monitor your investment. Talk to your fund manager to get updates about the
performance of your share. Remember that payments for mutual funds should only be done at the company’s office or
at a partnered bank to avoid any issues.
Best Mutual Funds in the Philippines in 2023
Now that you know how to invest in mutual funds in the Philippines, here are a few examples of the top mutual funds
in the Philippines (as of November 15, 2023) based on NAVPs.

Top-Performing Bond Funds in Peso Securities

Company Name NAV per Share Year-to-Date Return

ALFM Peso Bond Fund, Inc. ₱388.05 2.66%%

ATRAM Corporate Bond Fund, Inc. ₱1.8979 1.23%%

Cocolife Fixed Income Fund, Inc. ₱3.2878 2.46%

Ekklesia Mutual Fund Inc. ₱2.2381 2.41%

First Metro Save and Learn Fixed Income Fund, Inc. ₱2.415 1.00%

Top-Performing Money Market Funds in Peso Securities

Company Name NAV per Share Year-to-Date Return

ALFM Money Market Fund, Inc. ₱136.26 2.26%

First Metro Save and Learn Money Market Fund, Inc. ₱1.1035 2.79%

Sun Life Prosperity Peso Starter Fund, Inc. ₱1.3704 2.39%

Top-Performing Balanced Funds in Peso Securities

Company Name NAV per Share Year-to-Date Return

ATRAM Dynamic Allocation Fund, Inc. ₱1.4258 -3.97%

ATRAM Philippine Balanced Fund, Inc. ₱2.0922 -0.62%

First Metro Save and Learn Balanced Fund, Inc. ₱2.4071 -3.92%

First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund, Inc. ₱0.1838 -5.01%
Company Name NAV per Share Year-to-Date Return

NCM Mutual Fund of the Phils., Inc. ₱1.8705 -0.87%

*All consolidated data are based on the list provided by the Philippine Investment Funds Association.[3]
Where to Invest in Mutual Funds in the Philippines
Since investing in mutual funds in the Philippines will require you to have an investment platform, we’ve listed a few
options where you can put your hard-earned money.

Investment Platform Starting Investment Amount

FirstMetroSec FundsMart ₱1,000

COL Fund Source ₱5,000

Bonds.PH ₱5,000

Seedbox Philippines ₱1,000

GFunds ₱50

Best Mutual Funds in the Philippines in 2024

Top 15 Best Performing Equity Funds in the Philippines:
NAVPS Performance as of July 13, 2024. Data shows Year to Date (YTD Return %).
1. Sun Life Prosperity World Voyager Fund – 15.25%
2. Philequity Dividend Yield Fund – 11.03%
3. ATRAM Alpha Opportunity Fund – 9.21%
4. ATRAM AsiaPlus Equity Fund – 6.75%
5. Climbs Share Capital Equity Investment Fund – 6.18%
6. Sun Life Prosperity Philippine Equity Fund – 4.57%
7. ALFM Growth Fund – 4.47%
8. Philam Strategic Growth Fund – 4.19%
9. Philequity MSCI Philippine Index Fund – 3.89%
10. Philequity Fund – 3.68%
11. Philequity PSE Index Fund – 3.68%
12. Philippine Stock Index Fund – 3.60%
13. Sun Life Prosperity Philippine Stock Index Fund – 3.51%
14. COL Equity Index Unitized Mutual Fund – 3.51%
15. Philippine Stock Index Fund – 3.50%
Top 5 Best Performing Balanced Funds in the Philippines:
NAVPS Performance as of July 13, 2024. Data shows Year to Date (YTD Return %).
1. Sun Life Prosperity Dollar Advantage Fund – 10.10%
2. First Metro Save and Learn FOCCUS Dynamic Fund – 9.61%
3. PAMI Asia Balanced Fund – 6.56%
4. Sun Life Prosperity Dollar Wellspring Fund – 4.32%
5. Solidaritas Fund – 3.40%

Top 5 Best Performing Bond Funds in the Philippines:

NAVPS Performance as of July 13, 2024. Data shows Year to Date (YTD Return %).
1. Philam Managed Income Fund – 3.67%
2. ATRAM Corporate Bond Fund – 1.78%
3. ALFM Peso Bond Fund – 1.73%
4. Philam Bond Fund – 1.62%
5. Ekklesia Mutual Fund – 1.59%

Top 5 Best Performing Money Market Funds in the Philippines:

NAVPS Performance as of July 13, 2024. Data shows Year to Date (YTD Return %) including dollar securities.
1. ALFM Money Market Fund (in units) – 2.24%
2. Sun Life Prosperity Dollar Starter Fund – 2.17%
3. First Metro Save and Learn Money Market Fund – 2.05%
4. ALFM Money Market Fund (in shares) – 2.03%
5. Sun Life Prosperity Peso Starter Fund – 1.75%