Mutual Funds Money Market Philippines

Mutual Fund Philippines Related News: Industry Assets

2010-10-27T15:28:00.004+08:00

Industry Assets

by. HANNAH M. MURALLA, Special Features Assistant Editor

To quote a young trader in Oliver Stone’s new “Wall Street” flick, “If it weren't for people who took risks, where would we be in this world?”

Not everyone is willing to make a gamble, especially not in the financial ring, which only recently suffered from the global credit crunch. But the market’s inherent risks can be controlled, as shown by local fund managers who’ve managed to dodge the bear’s debilitating effects.

The Philippine asset management industry remained largely isolated from the global meltdown, thanks to widespread conservatism carried from the 1997 Asian financial crisis. “We’ve been quite cautious in the way we deal with the business. There were, of course, some ripples but not on the asset management sector...banks’ exposure have been relatively small compared to the size of the whole industry,” explained Rafael Ayuste, Jr., first senior vice president and trust officer of the PNB Trust Banking Group.

“Investments were focused primarily in local assets and there was little exposure, if any, to the US subprime sector,” added Michael Ferrer, managing director of ATR KimEng Asset Management. Although the assets under management of the mutual fund and unit investment trust fund (UITF) industries fell by 36% in 2008, Mr. Ferrer noted that no Philippine fund had to suspend redemptions due to lack of liquidity.

Understanding risks

Local fund managers, however, still had to reassure clients of their investments’ status. Maria Theresa Marcial-Javier, senior vice president of the BPI Asset Management and Trust Group (AMTG), recalled how the bank had to explain what was then transpiring in the financial markets and what its implications were on the global economy. “The first order of the day was to communicate how their investments were performing and that these remained safe,” she said.

These talks seemed to have worked. Ador Abrogena, executive vice president of BDO Trust and Investments Group, says that this time, clients kept still. Back in 2006, during the so-called UITF crisis, investors pulled their money out as soon as the market went down.

“Now it’s a totally different behavior; people were even placing more money as the market plunged. So when it went up, they were cashing in. We’re glad because they now know that the opportunity to make money is when the market is down,” Mr. Abrogena shared.

“Investors in general have also become more conscious of structures and the risks they’re taking. They have paid more attention to leverage levels and liquidity,” added Ms. Javier.

Take it on trust

But in the wake of the downturn, it’s not only their money that investors are tracking. According to professional services organization Ernst&Young, “the public is keeping a much closer and more skeptical eye on the financial services industry as a whole, and more particularly, on trust managers. Institutional investors are watching much more warily than was once the case.”

But if the results of a survey by financial services group ING are any indication, it appears that local fund managers still have their clients’ confidence, despite the persistent pessimism in the US economy. The quarterly poll found Philippine-based investors among the most upbeat in Southeast Asia, scoring 157 on the ING Investor Dashboard Survey, the fifth consecutive period that the Philippine index is in the black. Fifty seven percent of the 321 respondents believe the local economy improved in the third quarter, 60% are confident that the stock exchange will rise in the next quarter, and 77% think returns on their investment would increase.

“The Philippines, along with many emerging market economies, is becoming more resilient to external developments. Record-high overseas Filipino workers remittances and the strengthening of the peso against the US dollar have made a strong case for consumption-driven growth,” ING said.

Despite these bright signs, Mr. Ferrer noted that investors should expect lower dividends due to slow global growth and very low interest rates. The biggest challenge for today’s fund managers, he said, is how to deliver good returns while managing risks closely. “But there are always opportunities, such as new asset classes like commodities and currencies,” he said.

Mr. Abrogena shares this sentiment, noting how pre-crisis growth levels are becoming clearer on the Asian front. “Emerging Asia is the favorite [of investors] because all the other regions are not expected to grow as much anymore. The US and Europe’s populations are not increasing, they’re drawing on their savings while Asia has a younger population and a lot of economic activity going on to support the growth and the emerging economic power of the middle class,” he noted.

Amid shifting market conditions, Ernst&Young suggests that asset managers capitalize on new opportunities offered by communications and information technology. PNB’s Mr. Ayuste agrees, saying that the local sector has not been able to push technology to serve its clients better.

BPI appears to be making a head start: Mario Miranda, AMTG vice president for wealth management, earlier said that the bank is looking at allowing clients to access their investment accounts on the Web, a more convenient method than having them go to a bank branch for the same task.

Source: http://www.bworldonline.com/main/content.php?id=20164

Mutual Fund Money Market News: FAMI Bullish Over Stronger Equities

2010-10-26T03:52:00.000+08:00

FAMI Bullish Over Stronger Equities
By TPT (The Philippine Star) Updated October 26, 2010 12:00 AM

MANILA, Philippines - The First Metro Asset Management Inc. (FAMI) is bullish in the long-term prospects of higher equity prices as the Philippine and regional economies remain strong.

FAMI is the asset management unit of the First Metro Investment Corp., a wholly owned subsidiary of the Metrobank. FAMI is the fund manager of four mutual funds.

The Metrobank Group of Companies believes that the country’s gross domestic product (GDP) in the second semester will expand by 5.5 to six percent. Robust growth will be experienced in exports, manufacturing and business process outsourcing (BPOs), private construction, mining, and of course, remittances.

“The strong Philippine economy coupled with growing optimism over the new government, is supportive of higher equity prices as it attracts more funds and improves business conditions in the country,” Hector C. de Leon, executive vice president and chief operating officer of FAMI, said.

Longer-dated fixed income securities will continue to be more attractive than shorter tenors because of the country’s better-anchored inflation record and inflationary expectations. A low interest rate environment will persist until the end of the year and probably through the first half of next year.

Domestic firms are expected to continue tapping the debt market for capital, rather than take the riskier route of going public via the initial public offer (IPO), given the low interest rate environment.

Institutional and individual investors meanwhile are looking for more investment options other than the low-yielding special deposit account (SDA). One is the mutual funds managed by reputable fund managers.

FAMI manages four mutual funds invested in the equity or stock market (Save & Learn Equity Fund), the bond or fixed income market (Save & Learn Fixed Income Fund), the money market (Save & Learn Money Market Fund), and the combination equity and fixed income (Save & Learn Balanced Fund).

As expected, the yields of the equity fund has been growing by 62 percent since its inception five years ago. Its annual average yield stood at 28 percent. And the second best performer is the balanced fund, since a portion of the fund is placed in the equity market.

The balanced funds year-to-date yields stood at 59.79 percent since its formation three years ago. Thus its annual average yield is 21.22 percent.

The fixed or bond market has recorded a year-to-date yield of 8.63 percent, or a 7.24 percent yield growth since 2005. Finally, the year-to-date yield of its one-year old money market fund stood at 1.18 percent.

A mutual fund is a pool of individual and institutional investments managed by a fund manager. Initial investments can start as low as P2,000 to P5,000, making it a popular investment option for retail and institutional investors.

So far, there are 44 mutual funds, managed by nine licensed fund or asset managers. It has a counterpart investment tool in the trust funds managed by a licensed trust department of a commercial or thrift bank. The most popular trust fund tool is the unit investment trust fund.

Source: http://www.philstar.com/Article.aspx?articleId=624192&publicationSubCategoryId=74

Home Development Mutual Fund (Pag-IBIG Fund) News: P600 Advance Payment Benefitting OFWs — Binay

2010-10-25T22:58:00.000+08:00

By MADEL R. SABATER | October 25, 2010, 6:02pm

MANILA, Philippines — The advance payment of P600 to the Home Development Mutual Fund (Pag-IBIG Fund) by departing Filipino workers may have been suspended, but Vice President Jejomar Binay said overseas Filipino workers (OFWs) should be convinced that it will be beneficial to them in the long run.

“Yung P600 na yun, kung hindi ito ang pinakamaliit, isa sa pinakamaliit na babayaran ng aalis nating kababayan [The P600 initially required among OFWs is one of the lowest, if not the lowest, amount that a Filipino worker leaving the country would have to pay],” Binay said.

He, however, said he acknowledged that the problem with implementing the compulsory payment of P600 among Filipino workers set to leave the country had become a burden because they were also concerned of other expenditures before going abroad.

He said he will continue to explain the positive effect of OFWs’ advance payment to Pag-IBIG Fund in his upcoming dialogues with Filipino migrant organizations.

Binay ordered the suspension of Memorandum Circular No. 06 Series of 2010 in August that required OFWs a six-month advance payment to Pag-IBIG as a precondition to their departure.

Binay said that it would be more convenient to them in the long run, as he reminded OFWs that it is now compulsory that they become members of Pag-IBIG Fund. Membership to the Fund used to be optional among OFWs. “Food, education, and shelter are the essentials being dreamed of by our OFWs while they are working abroad,” Binay said.

Philippine Overseas Employment Administration Administrator (POEA) Jennifer Jardin–Manalili, in a briefing to the Vice President, assured that OFWs can continue paying their Pag-IBIG membership in Philippine Overseas Labor Offices (POLOs) abroad under the Kabayanihan Program.

The program integrates various social protection services for OFWs such as access to services of Pag-IBIG Fund, Social Security System, Philhealth and POEA. The one-stop transaction system has been set up at POLOs abroad.

“Makakapagbayad ang ating mga kababayan para ma-continue nila ang membership nila [OFWs abroad can continue paying for their membership there],” Manalili said.

Source: http://www.mb.com.ph/articles/284147/p600-advance-payment-benefitting-ofws-binay

Mutual Funds Philippines Related News: PAMI-managed mutual funds reach P18 billion in August

2010-09-15T21:25:00.001+08:00

By Ted P. Torres (The Philippine Star)

MANILA, Philippines - One of the leading fund managers for mutual funds is extremely optimistic that 2010 and 2011 will be a great year.

Philam Asset Management Inc. (PAMI) executive vice president Gina Goco-Morales said that 2010 and 2011 would record major gains for both PAMI and the country’s mutual fund industry.

Morales noted that the strongest quarter for mutual funds is the last three months of the year.

“We are already doing P3.8 billion better and it is still the third quarter, it will be a great year,” she said.

PAMI is an asset management company that manages, distributes and provides investment advisory to seven mutual funds. It is a subsidiary of the Philippine American Life and General insurance Co. (Philamlife), the country’s leading life insurance and financial company.

PAMI reported assets under management (AUMs) of the seven mutual funds it oversees are worth P18 billion as of end August 2010. At the end of 2009, the assets were worth P15.53 billion.

The biggest asset volume managed by PAMI was worth P21.91 billion recorded in 2007. The country’s mutual fund industry also reported a record P86.19 billion worth of AUMs.

One major factor for a stronger 2011, is the ability of the Aquino administration to curb or reduce corruption, and get the private public partnership (PPP) program off the ground and rolling into 2011.

“The program allows the private sector to do their stuff, and we need more foreign investments, too!” the PAMI senior executive said.

Net foreign portfolio investments surged 385 percent in the first eight months of 2010 pumping more into the local securities and equities markets $883.4 million, or about $701 million higher than the net inflow of $182.2 million in the same period last year.

“A lot of the foreign investment inflows are entering the equities market, where a lot of the securities are still under their price to equity (P/E) ratios,” Morales added.

The country’s gross domestic product (GDP) zoomed by 7.9 percent in the first six months of 2010, compared to the 1.2 percent in the same period in 2009.

But one of the major challenges is to seduce investments locked in special deposit accounts (SDAs). It is estimated that P900 billion is sleeping in low-yielding (between 2.5 to three percent) albeit secure SDAs.

Investors had become risk-averse after 2008, and it is taking time to entice them into higher-yield investments like mutual funds, trust funds, or the capital markets. Business is hoping that the bullish equities market can lure the funds.

Also adding to the industry’s woes, is government’s penchant of offering retail treasury bonds (RTBs), which lured billions of pesos away from private-run fund.

Nonetheless, PAMI executives said that they will introduce another fund in the next few months to prepare for the entry of domestic and foreign invest-ments.

The seven mutual funds managed by PAMI are: Philam Strategic Growth Fund
Inc. (PSGF), Philam Fund (PFI), GSIS Mutual Fund (GMFI), Philam Bond Fund (PBFI), Philam Dollar Bond Fund (PDBF), Philam Managed Income Fund (PMIF), and NCM Mutual Fund of the Philippines Inc. (NCMMFPI). It is also the local fund manager for the AIG Global Bond Fund Inc.

As of end August, the net asset value per share (NAVPS) of the PSGF stood at 403.47, or a year-to-date (YTD) return of a whopping 27.84 percent and a one year return of 31.12 percent, or a five-year return of 16.39 percent.

The YTD of the PFI stood at 24.07 percent with a NAVPS of 10.5647, while the GMFI reported YTD expansion of 22.31 percent.

The PBFI reported YTD gains of 4.87 percent or a one-year return of 6.12 percent.

The PDBF displayed a NAVPS of $1.1769 with YTD growth of 1.58 percent, a one-year return of 2.18 percent, and a three-year return of 2.6 percent.

Source: http://www.philstar.com

Home Development Mutual Fund News for OFWs

2010-08-11T20:15:00.004+08:00

I came across inquirer.net and saw this news about Home Development Mutual Fund (HDMF) commonly known as PAGIBIG.

OFWs Slam 6-month Advance Payment to Pag-IBIG

MANILA, Philippines—Overseas Filipino workers and their recruiters alike are up in arms over the compulsory six-month contribution OFWs are now forced to make to the Home Development Mutual (Pag-IBIG) Fund even before they could leave to start work abroad.

The OFW group Migrante International described the mandatory contribution as another form of “legalized kotong (unjust exaction) as well as “bawal na pag-ibig (forbidden love),” puns on the original, and still popular, name of the fund, which was “Pagtutulungan sa Kinabukasan: Ikaw, Bangko, Industriya at Gobyerno.”

“This added burden is unfair, unreasonable and we question its real intent,” said Migrante chair Garry Martinez in a statement.

Martinez called on the government to stop the implementation of Republic Act No. 9679, saying that “if the President has the interest and welfare of OFWs at heart, he should first conduct consultations with OFWs before imposing more questionable and onerous fees.”

Martinez said they also plan to bring the OFWs’ opposition to the attention of Vice President Jejomar Binay, chair of the Housing and Urban Development Coordinating Council.

The Philippine Overseas Employment Administration recently issued a memorandum compelling OFWs to pay, upon registration and deployment, an initial membership contribution of P600 for six months as a prerequisite to the issuance of their Overseas Employment Certificate.

The circular became effective on Aug. 1 as a result of RA 9679, or the Home Development Mutual Fund Law of 2009, which places informal sectors under mandatory Pag-IBIG coverage.

Martinez said RA 9679 states the fund should come from the “mandatory contribution support of the employers.”

It also states that “failure or refusal of the employer to pay or remit … shall not prejudice the right of the covered employee to the benefits.”

He said the law became “muddled and misleading” in its implementing rules and regulations.

“These irregularities once again entail the virtual passing on of fees meant for the employers to the OFWs. Despite what is clearly stated in the law, the government unfortunately has no soundproof mechanism to ensure that the employers would pay their share. Moreover, can we really count on the employer to pay the contribution of the OFW since, sometimes, the employer would not even pay wages?” he said.

For its part, the Philippine Association of Service Exporters Inc. said it had no objection to the mandatory Pag-IBIG membership for OFWs but to the implementing rules.

Pasei president Victor Fernandez Jr. said Pag-IBIG was a way for OFWs to save for the future, build assets and provide a tangible “sense” or reason for working overseas and making worthwhile their sacrifice of being away from their loved ones.

What Pasei objects to is why overseas employers are being used as membership implementors and why the compulsory contribution is tied to the processing and documentation of OFWs' travel papers, he said.

"Why will the OFWs be deprived of their right to employment if they do not pay before their departure? Why can’t they just be made a member before departure and be made to pay when they are onsite?" he said.

Fernandez also wondered how the six-months advance payment figure was arrived at. "Why not three months? Why not one year in advance? Why not payment depending on the duration of the contract? Why not monthly paid by beneficiaries instead?" he said.

He said the law did not specifically provide for the advance compulsory contribution "because it was not intended" to be that way.

"There is a cosmetic agenda here," he said.

Furthermore, Martinez said, the OFWs were being forced to make contributions when they were not even assured of receiving housing benefits. He cited a section of the law that states that only members with the “ability to pay” would be granted housing loans.

“How will the fund’s board of trustees determine if OFWs have the ability to pay? It now appears that not all who pay can avail of a housing loan. What if you’re just an OFW with small earnings or a contractual employee and cannot afford the monthly amortization? You’re paying for nothing. This is really an illegal exaction,” Martinez said.

Source: Jerome Aning of Inquirer

How do mutual funds work?

2010-07-26T00:01:00.004+08:00

A mutual fund is a company that pools investors' money to make multiple types of investments, known as the portfolio. Stocks, bonds, and money market funds are all examples of the types of investments that may make up a mutual fund.

The mutual fund is managed by a professional investment manager who buys and sells securities for the most effective growth of the fund. As a mutual fund investor, you become a "shareholder" of the mutual fund company. When there are profits you will earn dividends. When there are losses, your shares will decrease in value.

Mutual funds are, by definition, diversified, meaning they are made up a lot of different investments. That tends to lower your risk (avoiding the old "all of your eggs in one basket" problem).

Because someone else manages them, you don't have to worry about diversifying individual investments yourself or doing your own record keeping. That makes it easier to just buy them and forget about them. That's not always the best strategy, however -- your money is in someone else's hands, after all.

Since the fund manager's compensation is based on how well the fund performs, you can be assured they will work diligently to make sure the fund performs well. Managing their fund is their full-time job!

Mutual funds can be open-ended or closed-ended. But many people consider all mutual funds to be open-ended, while putting closed-ended funds in another category.

"Open-ended" means that shares are issued in the fund (or sold back to the fund) whenever anyone wants them. With closed-ended funds, only a certain number of shares can be issued for a particular fund, and they can only be sold back to the fund when the fund itself terminates. (You can sell closed-ended funds to other investors on the secondary market, though.)

Load refers to the sales charges added to a mutual fund when you purchase it. The load charge goes to the fund salesperson as a commission and payment for their research services. Load charges can be up to 8.5 percent of the selling price and can be figured in as a front-end load (meaning you pay it when you buy the mutual fund) or a back-end load (meaning you pay when you sell the mutual fund).

Many mutual funds are no-load funds. Yes, that means there is no sales fee charged and the fund is direct-marketed so you can buy it without the help of a salesperson. With the wealth of information on the Internet today, it is certainly easier to make smart choices yourself to save money.

In addition to no-load funds, there are also funds that charge up to 3.5 percent as a sales fee. These are called low-load funds and can still be a good deal.

Mutual funds fall into three categories:

Equity funds are made up of investments of only common stock. These can be riskier (and earn more money) than other types.
Fixed-income funds are made up of government and corporate securities that provide a fixed return and are usually low risk.
Balanced funds combine both stocks and bonds in the investment pool and offer a moderate to low risk. While low risk may sound good, it is also accompanied by lower rates of return-meaning you risk less, but your investment won't earn as much. You have to decide how much risk you're willing to take on before you invest your money.

If you have invested in a college savings fund or a 401k account, chances are good that already own a few mutual funds. Mutual funds are great for long-term investments like these. You can also buy mutual funds directly from a mutual fund company.

Most of these offer no-load funds (or sometimes low-load funds). You can find lists of mutual fund companies on the Internet and purchase shares by simply filling out an application and mailing a check. Once you are a shareholder, you will receive statements telling you how the fund is doing as well as how much your own investment is growing. You can also set up monthly bank transfers to automatically buy more shares every month.

Remember to do your research and select a mutual fund that fits the level of risk you are willing to take with your hard-earned cash. Then just sit back and hope for the best!

For more information on investing and financial planning, check out the links on the next page.

Source Link

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Here's another article about the subject:

How Mutual Funds Work

Every mutual fund has a goal - either growing its assets (capital gains) and/or generating income (dividends) for its investors. Distributions in the form of capital gains (short-term and long-term) and dividends may be passed on (paid) to shareholders as income or reinvested to purchase more shares. For tax purposes, keep track of your distributions and cost basis of purchased/reinvested shares.

Like any business, mutual funds have risks and costs associated with returns. As a shareholder, the risks of a fund and the expenses associated with fund's operation directly impact your return.

Returns

As an investor, you want to know the fund's return-its track record over a specified period of time. So what exactly is "return?"

A mutual fund's return is the rate of increase or decrease in its value over a specific period of time usually expressed in the following increments: one, three, five, and ten year, year to date, and since the inception of the fund. Since return is a common measure of performance, you can use it to evaluate and compare mutual funds within the same fund category. Generally expressed as an annualized percentage rate, return is calculated assuming that all distributions from the fund are reinvested.

Since average returns can sometimes "hide" short-term highs and lows, you should evaluate returns for a time period of several years-not just one year or less. A fund that has a high return in one year may have experienced losses in other years-these fluctuations may not be apparent in its average return. While a fund's return shows its track record, keep in mind that past performance is no guarantee of future results.

When using returns to compare funds, always use net returns. Net returns are the true returns of both load and no-load funds after deducting all costs and expenses.

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Mutual Fund Related News: New Mutual Fund Rules Won’t Limit Advice

2010-07-25T01:21:00.001+08:00

New Mutual Fund Rules Won’t Limit Advice
By RON LIEBER

In today’s New York Times, our colleague Edward Wyatt has an article about the Securities and Exchange Commission’s efforts to rid the mutual fund industry of 12b-1 fees, which can cost investors hundreds or even thousands of dollars if they hang on to a sizable investment for long enough.

The S.E.C.’s proposal would limit the fees in a number of ways, and apparently, some lawyers who work for fund companies think this could lead to consumers getting less advice from their advisers.

I don’t buy it for a minute.

Here’s how the fund industry’s argument goes, per Mr. Wyatt’s article:

Robert M. Kurucza, a law partner at Goodwin Procter, which represents some of the largest fund companies, and who served as an assistant director of the S.E.C. division that oversees mutual funds, said that if the proposals were adopted, “they could have extraordinary ramifications in the marketplace for how mutual funds are sold and marketed.”

Not all of those ramifications are necessarily good, Mr. Kurucza said. In a world where investors are increasingly responsible for managing their retirement assets, intermediaries can give advice on asset allocation and performance. Limiting the amounts of money available to compensate those advisers could have the unintended consequence of limiting the advice available to investors, he said.

This is only true, however, if advisers can’t think of any way to make money other than by collecting fees from fund companies in exchange for pushing the fund firms’ high-priced investments on consumers.

There are plenty of financial planners who already work on a fee-only basis, meaning they make money only by charging customers directly for their services. You can pay these professionals by the hour or pay them a percentage of your assets under management each year or some other way.

Some advisers argue that it’s cheaper for many customers to let fund companies compensate the advisers for their time via mutual fund fees while those customers pay nothing for their advisers’ time. Perhaps. But the S.E.C. notes that some advisers are collecting fees on funds decades after they first sold them. It’s certainly possible that that continuing revenue stream could affect whether an adviser decides to move a customer out of those funds.

Over time, I think more consumers will gravitate toward paying simple, transparent fees for financial advice to people who earn no money from any of the firms that provide investments.

So how many of you know exactly how your financial adviser gets compensated? And how many advisers who collect revenue via these sorts of fees think the S.E.C.’s proposal is unfair or will lead to fewer people getting financial advice?

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Philippines Mutual Fund Updates: BSP keeps key interest rates steady

2010-07-23T13:12:00.001+08:00

This is an article from Manilatimes.net. Friday, 16 July, 2010. Please read...

BSP keeps key interest rates steady
By Lailany P. Gomez reporter

The Bangko Sentral ng Pilipinas (BSP) on Thursday announced it would shift to a medium-term inflation target, as it kept policy rates steady for the ninth time on the back of manageable price increases. In a press briefing, BSP Governor Amando Tetangco Jr. said the Monetary Board decided to keep the overnight borrowing or reverse repurchase (RRP) rate at four percent and the overnight lending or repurchase (RP) rate at six percent. The interest rates on term RRPs, RPs and special deposit accounts were also left unchanged.

Tetangco said the Board’s decision was based on its assessment that the current monetary settings continue to be appropriate, given the favorable inflation outlook and on-target inflation expectations.

“Recent surveys also show that inflation expectations remain firmly anchored within the inflation targets over the policy horizon,” he said.

Earlier, the BSP revised its inflation forecast this year to 4 percent from the original 4.7 percent, and for 2011 to 3 percent from 3.6 percent.

Tetangco however said the Board also noticed inflation pressures such as stronger-than-anticipated domestic economic activity and buoyant consumer and business sentiment.

“The BSP will continue to closely monitor emerging price pressures and coordinate as necessary with concerned government agencies on possible measures to address supply side concerns,” he said.

Other upside risks include rising liquidity and strengthening credit activity, recovering global commodity prices, power rate hikes and declines in agricultural output due to adverse weather conditions.

In a separate statement, the BSP announced the approval by the inter-agency Development and Budget Coordinating Committee of a medium-term inflation target to promote a long-term view on inflation and increase the predictability of monetary policy.

The central bank said it has shifted to a fixed inflation target of between 3 percent and 5 percent for 2012 to 2014 from a variable annual inflation target.

Deputy Governor Diwa Guinigundo said the fixed medium-term inflation target will also help anchor inflation expectations and support consumption and investment by fostering greater predictability in economic decisions.

“This target is appropriate given the consistency of the latest inflation forecasts with the desired inflation path, the private sector’s inflation expectations and growth prospects of the economy,” he said.

“This is something that the BSP decided for itself. This will also help the market better appreciate the formulation of monetary policy. Businessmen can plan ahead or can assess,” he added.

The BSP however would continually review its medium-term target to align it with the latest macroeconomic conditions.

More companies borrowing in 2H
Adelbert Legasto, Bank of the Philippine Islands (BPI) executive vice president and asset management head, said more companies would likely borrow in the second half of the year following the BSP move to hold onto existing interest rates.

“Borrowing may start to move up as far as the companies are concerned because borrowing at lower interest rates makes them decide to do investments in business that can give them better yields than the borrowing rate,” Legasto said.

He said second-half borrowings however would be lower than in the first six months of the year, as the majority of big companies already finished their fund-raising activity.

“In terms of number, there’ll be more activity in the small- and middle-market level,” he said.

The executive said equities would outperform bonds this year because the former would have a bit more upside, as stocks have yet to return to pre-crisis price levels.

“Bonds will be more to address your fixed-income requirement, which is more conservative so you don’t look at very high returns in bonds compared to equity,” he said.

In this regard, ALFM, a mutual fund that BPI manages, is placing its bets on the power and real estate sectors to lead trades in the second half.

“Part of it will be because of the real estate investment trust and there’s a lot of activity going around, all the buying and selling. Since interest rates are down, people will have more money to buy properties,” Legasto said.

BPI manages the ALFM Family of Funds, which had P470 billion in assets. ALFM is comprised of ALFM Peso Bond Fund, ALFM Dollar Bond Fund, ALFM Euro Bond Fund, ALFM Growth Fund, Philippine Stock Index Fund and ALFM Money Market Fund.

This year, ALFM sees a 14-percent growth in its aggregate net asset value despite concerns over the global economy.

“We are still on track as far as achieving those projections are concerned,” said Legasto.

In 2009, ALFM grabbed 45 percent of the P68.7 billion mutual fund industry followed by Philamlife with a 23 percent share and Sun Life at 22 percent.

Source Link

Philippine Mutual Funds News: BPI sees 14% rise in mutual-fund value in 2010

2010-07-23T13:01:00.002+08:00

I read this article/news from businessmirror.com. Find out how BPI sees 14% growth in this year mutual fund market in the Philippines.

BPI sees 14% rise in mutual-fund value in 2010
Written by Erik dela Cruz / Reporter (Thursday, 15 July 2010 21:56)

THE ALFM Family of Funds, the largest group of mutual funds in the Philippines and managed by BPI Investment Management Inc. (BAMI), will likely post an average 14-percent growth in net-asset value this year given improved investor sentiment, the funds’ managers said on Thursday.

Adelbert Legasto, executive vice president and head of asset management and trust group at the Ayala Group’s Bank of the Philippine Islands, painted a rosy outlook for ALFM mutual funds this year and was particularly bullish about yields from the equities market.

BAMI is a wholly owned unit of BPI, which ended the first quarter with total trust assets of P447 billion. Assets under management by BPI have grown to around P460 billion, according to Legasto.

“The market conditions are very ripe for investors to start looking for better returns as interest rates have started to move down and offer very low yields,” he said at a news briefing. “You can actually get better yields when investing in mutual funds.”

Legasto said that among asset classes, equities were expected to be the best performer. “Fundamentals are pretty good yet prices are still low.”

Given the improved bottom lines of listed companies, he said investors should get better yields in the equities market than in the bond market. He also noted that some “very conservative” investors have actually shifted into the mutual fund business because of the low interest rate environment, which has resulted in reduced yields particularly from bank deposit products.

The ALFM funds continued to achieve positive returns for investors last year, Legasto said, “while keeping risks appropriately managed and minimized.”

The BPI-managed mutual funds are the ALFM Peso Bond Fund, ALFM Dollar Bond Fund, ALFM Euro Bond Fund, ALFM Growth Fund, Philippine Stock Index Fund and ALFM Money Market Fund. He said these funds cornered a combined 45-percent share of the P68.7-billion mutual fund industry, which grew 14.5 percent last year.

The industry suffered a 30-percent contraction in 2008 when investor sentiment dropped amid the global financial crisis.

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The Truth About Mutual Funds

2010-07-17T10:21:00.001+08:00

By Alvin C. Malasig (The Philippine Star) Updated July 16, 2010 12:00 AM

MANILA, Philippines - Most of us would usually want to have a substantial amount of cash in the bank. An average person will often set aside a part of his earnings in a bank account. For those who have more money to spare, buying a piece of real estate will likely be an option.

But apart from these traditional investment options, there are new investment schemes available to us that are still relatively untapped and little known to most Filipinos. One of them is mutual funds.

Now what are mutual funds? Mutual funds are a collective investment scheme wherein money from so-called “retail investors” are pooled in a fund which is then invested by professional fund managers in securities such as bonds and stocks, among others. The fund managers in turn earn money by deducting a fee from your investment.

Just like any form of investment, venturing into mutual funds has its pros and cons which any would-be investor has to know before putting in that hard-earned money. Let me mention a few.

Advantages:

1. Multiple Options

As they say, never put all your eggs in one basket. This adage can never be truer when it comes to investments. None of us would want to lose our life-savings in a single sweep. With this in mind, mutual fund companies offer various investment options tailor fit to an investor’s appetite for risk.

For more daring investors, there are all-stock investment options, meaning the entire fund is placed in stock market investments. This is meant for investors who have a good appetite for risk and have a keen sense on stock market movements but who do not have the time to personally buy and manage their investment portfolio.

This type can potentially give you higher returns if the stock market is moving in the right direction. But your losses can likewise be greater if it’s not. In order to cut the risks, the fund is usually invested in several companies with the hope that some of them will buck the trend in case of a downturn.

Conservative investors who want the certainty of a bank savings or time deposit but slightly higher interest yields than what traditional bank accounts can give, an all-bond option is the right choice. In an all-bond option your money will be invested in government-issued securities. You are in effect lending your money to either our own government and its subdivisions or a foreign one.

Since they are guaranteed by a government, the risk of default or non-payment is considerable low. You can expect that the debt owed to you will be paid on its due date, just as you can expect the sun to rise in the east every morning. The risk that a country will collapse is way too remote especially the stable ones unlike corporations which can be forced by economic forces to close down. But this type expectedly, will offer a lower return for your investment.

Those who want a more balanced investment portfolio, mutual fund companies offer a mixture of stocks and bonds that are not as risky as an all-stock investment but offer a higher return than an all-bond option.

2. Professionally managed investment portfolio

Your money will be handled by professional fund managers who watch and study the markets on a daily basis. It is their bread and butter after all. You can rest assured that your money is in the hands of experts in the field who will make the right decisions on your behalf thus making investing hassle-free.

3. Higher yields

Unlike traditional bank accounts, mutual funds, regardless of type, have the potential to give you yields that are greater than our country’s inflation rate. Bank deposit rates are normally lower or at par with our inflation rate. This will, in effect negate whatever earnings that you have made. Your money will only grow in absolute terms but its purchasing power would probably stay on more or less the same level as when you first made the deposit.

Disadvantages:

1. Risk of loss

Compared to cash deposits in reputable banks, you can lose money in mutual funds depending on economic or business conditions which are beyond any investor’s control. Your investment is at the mercy of market forces which can either make or break you financially.

As an investor, you must also rely on your own wise judgment on whether to keep the investment or pull out of it depending on how external factors that can affect it are moving. At the end of the day, it is your money so you cannot completely rely on the decision of fund managers.

2. Unpredictability of performance

Mutual fund companies would normally show you a good interest yield trajectory in the past years. But this is no guarantee that your money will really earn a very good amount of interest. It would be best for any investor to choose a reputable company which puts its assets in good investments so that you will be assured of decent returns or at least prevent a huge loss.

3. Expensive

Since you’re asking mutual fund companies to manage your money in your behalf, you can expect that they will charge you a good fee for their services, which is but fair unless it is downright exorbitant. Choose a company which will charge a reasonable amount and discloses all of the charges before you entrust your money to them.

Remember that a mutual fund investment is not a get-rich-quick scheme. For maximum yields, it must be a long-term investment otherwise you will see no appreciable interest in your investment and whatever you earned might just end up being eaten up by fees.

Mutual funds are a good alternative to traditional investments for as long as you have the foresight and ample knowledge about how it works. They are a great tool for wealth creation. But as in any other undertaking, you just have to do things the right way when you decide to give it a try.

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Mutual Funds: What Is Mutual Funds?

2010-07-17T09:55:00.000+08:00

Mutual Funds Definition. Here's what I found from wikipedia.org

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).

The mutual fund will have a fund manager that trades (buys and sells) the fund's investments in accordance with the fund's investment objective. In the U.S., a fund registered with the Securities and Exchange Commission (SEC) under both SEC and Internal Revenue Service (IRS) rules must distribute nearly all of its net income and net realized gains from the sale of securities (if any) to its investors at least annually. Most funds are overseen by a board of directors or trustees (if the U.S. fund is organized as a trust as they commonly are) which is charged with ensuring the fund is managed appropriately by its investment adviser and other service organizations and vendors, all in the best interests of the fund's investors.