Archive for the ‘Investing’ Category
Where to begin on Mutual Funds
I’ve been receiving quite a handful of queries about investing in mutual funds (MF). In my last post on MFs, I said that “if you want to have equity exposure (which you should) and yet do not want to go mental with all those stock charts and disclosures, I strongly urge investing in mutual funds.”
Some of the FAQs I received that I think are quite relevant especially for those of you who are very keen on investing in MFs are:
- What type of MF is right for me?
Well, it depends on your risk apetite. Basically, there are four types of MF: equity (essentially the stocks), balanced, bond and money market funds. The bond and money market funds are for the more conservative investors since they fend for capital preservation. For instance, the bonds funds invest in… bonds, which include both T bills that are issued by the government and commercial papers issued by established companies in the country. On the other hand, equity funds are more aggressive in terms of growth — investing in the PSE. When you’re invested in equity funds you are also invested in the stock market (I can so hear myself saying, “you don’t say?”).
Finally, as the name implies, a balanced fund is where you are invested in both bonds and stocks. Given the current performance of the Philippine market and its potential, I would definitely go for either the equity fund or the balanced fund. - Which MF company should I invest in?
According to the PIFA (Philippine Investment Funds Association), there are 30 MFs in the country that are invested in Peso securities (Equity: 8; Balanced: 7; Bonds: 10; Money Market: 5). Since I’m only recommending either the equity fund or the balanced fund, let’s just look at the performances of the different funds in those sectors as reported by the PIFA.
STOCK FUNDS (as of 1Q of 2012, 4/18/2012)
YTD Return (%) 1 yr. (%) 3 yr. (%) 5 yr. (%) Philam Strategic Growth Fund, Inc. 23.45 23.14% 37.82% 13.91% Philippine Stock Index Fund Corp. 20.33 22.53% 35.5% 9.59% First Metro Save and Learn Equity Fund,Inc. 19.16 28.31% 43.21% 15.93% Philequity Fund, Inc. 18.50 22.17% 41.03% 14.73% Sun Life Prosperity Phil. Equity Fund,
Inc.17.48 14.62% 30.95% 10.37% ATRKE Equity Opportunity Fund, Inc. 17.04 14.85% 31.77% 8.15% Philequity PSE Index Fund Inc. 15.90 21.81% 34.69% 12.7% United Fund, Inc. 7.46 3.75% 14.53% 7.04% BALANCED FUNDS (as of 1Q of 2012, 4/18/2012)
YTD Return (%) 1 yr. (%) 3 yr. (%) 5 yr. (%) ALFM Growth Fund, Inc. 24.55% 24.89% 42.13% n.a. GSIS Mutual Fund, Inc. 22.29% 20.08% 31.95% 13.07% Philam Fund, Inc. 21.9% 22.56% 32.7% 12.98% Bahay Pari Solidaritas Fund, Inc. 19.95% 18.63% n.a. n.a. NCM Mutual Fund of the Phils., Inc 19.56% 21.31% n.a. n.a. First Metro Save and Learn Balanced Fund,Inc. 17.92% 26.67% 39.83% n.a. ATRKE Philippine Balanced Fund, Inc. 13.34% 12.38% 21.86% 6.35% Optima Balanced Fund, Inc. 12.83% 18.14% 21.01% 8.89% Sun Life Prosperity Balanced Fund, Inc. 12.81% 11.89% 20.97% 8.91%
Looking at the table, personally, I would go for First Metro Securities’ Funds (both equity and balanced). What is the minimum initial deposit required? Only ₱5,000.
Happy investing!
Leveling Up
In Mr. Hans Sicat’s presentation last March 15 at the Bloomberg LP, he mentioned that the PSE’s strategic agenda can be summed up in two words: LEVEL UP, i.e.,
- List more companies and securities.
- Expand and educate the investor base.
- Value and enforce corporate governance standards.
- Enhance shareholder value.
- Launch new products and services.
- Upgrade market infrastructure and human resources.
- Partner with government and other stakeholders.
Besides, this year marks the final year of implementation of these agenda. He also highlighted some milestones that were achieved in 2011: Rule Amendments, Market Education Initiatives, Improved Governance, and of course, Increased Trading Activity. Awesome job, PSE!
E with Mr. Hans Sicat, President and CEO of the Philippine Stock Exchange, Inc. (PSE) at the PSE-Bloomberg hosted road show in SG.
I believe that it is also important to highlight that the average daily trading has increased by as much as 15.5% in 2011 (from 2010). Moreover, I read a news clip on the PSE (source: Technistock) that says “higher trading activity and record capital raising levels boosted the revenues of the Philippine Stock Exchange (PSE) in 2011 by nearly, 10 percent.” With these information, I am thinking that the PSE (stock) might be worth a look.
Anyway, the PSEi closed at 5,102.24 today, down by around 0.48%. I have been expecting this and I believe that this is just a healthy consolidation, nothing to worry about. When I was at the PSE-Bloomberg road show, I was very much convinced that every one in the forum agrees on one thing: that the growth of the Philippine economy is sustainable. The panelists in the open forum were:
- Lian Chia Liang, Head of Investment Management, Asia of Western Asset Management
- David G. Fernandez, Managing Director of JPMorgan Chase & Co
- Edward Lee Wee Kok, Regional Head of Research, SEA of Standard Chartered Bank
- Tamara Henderson, PhD Economist in Bloomberg L.P.
Err.. Some details. My portfolio still has not changed, with ORE as its top gainer. I plan to diversify soon though because I’m fully invested in the Mining and Oil sector alone! I mean, with the PSE’s very bright future ahead, I suppose that it’s time for me to reconsider some blue chips. Now, in terms of fundamentals and the amount of money I’m playing with, I have my eyes set on MPI and DMC and PGOLD. A friend also pointed out that PCOR has been lagging behind. True. It does have a substantial potential at its current level.
Anyway, everything within my radar looks so darn attractive! I’m just painstakingly waiting for them to reach comfortable entry levels. I need to research some more though — fundamentals first before the technicals.
Eye on the Philippines
It was such a privilege to be invited by the Philippine Stocks Exchange, Inc. (PSE) to a seminar they co-hosted with Bloomberg LP here in Singapore.
The road show on Thursday was especially exciting and enlightening for me since it was my first time to be in a company of big investors, businessmen, finance people, and economists… in Singapore — a global financial center. What’s more interesting for me is that they all gathered to talk about the Philippine economy. The back-to-back talks covered the following matters:
- Investment climate in the Philippines, trends, priority sectors and Public/Private partnership projects by Department of Trade and Industry Undersecretary Cristino L. Panlilio
- The latest development in the Philippines’ capital market, opportunities, challenges and its resilience in light of current economic landscape by PSE President and Chief Executive Officer Hans B. Sicat
- The Philippines’ path to investment grade by Nomura Holdings, Inc. Economist Euben Paracuelles
Everyone agrees that the radar of investment bankers and managers is currently focused on the ASEAN economies; and, we need to take advantage of this now. USec Panlilio highlighted 10 macroeconomic performance indicators that substantiate the phenomenal state of the Philippine economy. I will outline most of them here (I was too engrossed listening to their talks that it escaped me to take down notes; although I was able to jot down a few).
- We are the #1 Asian performing stock market in 2011, with back-to-back all-time highs.
- There is a continuous inflow of OFW remittances, which translates to a well-supported and well-driven “consumer power.” Moreover, any decrease in its current velocity is not expected.
- There has been a steady export growth despite the global economic slowdown. This is of course anchored on our business process outsourcing (BPO) industry, which deploys 640,000 people (especially the service exports; 60% voice, 40% non-voice). Moreover, there was a 21.3% (sum-total of external sector) surge in Gross Int’l Revenues by January 2012.
- With the infrastructure projects leading the way, and then growth in exports, we are seeing a very stable and resilient economic growth. Economic forecast “easily” sees around 6-7% GDP growth rate.
- We now have an investment-driven development, with ~30% increase in investments in just a year. There have been a lot of proactive measures put in place by the Board of Investments (BOI) and Philippine Export Zones Authority (PEZA) to lure more foreign investors into investing in our beloved country. FYI, our top five (5) foreign investors in 2011 are: Japan, USA, Netherlands, China, and Singapore.
- We have a robust domestic financial sector that is coupled with a robust credit growth. The outstanding loans grew by 19.3% for 2011, which translates to a better propensity to lend. Moreover, our non-performing ratio is down to 2.39% — the “most sacred ratio”.
- We are starting to balance our budget and have a more efficient revenue collection effort.
- Our global competitiveness rankings have improved: World Economic Forum (+10 pts), World Bank Ranking (+1), Transparency International Ranking (+5). We now have focus groups that make sure we are globally competitive.
- Finally, we are Asia’s friendliest country and we have a huge population, hehe. This means that we have a quite veritable market, especially if they would just add more purchasing power to the population.
With these outlined in the talks, I really hope that more investors would turn their eyes toward the Philippines.
Citius, Altius, Fortius, Pilipinas!
P.S. Mr. Arthur R. Tan, President & CEO of Integrated Micro-Electronics, Inc. (IMI), gave a short talk titled “Resurgence of the Philippines as a Strategic Option for Asia Electronics Engineering and Manufacturing”. On the other hand, Mr. Emmanuel L. Samson who is the Chief Financial Officer of Nickel Asia Corporation (NIKL) gave a presentation titled “Major Nickel Producer with Long Track Record”.
The Philippine Market
A few weeks ago, some time in February, I gave an investment talk to a few OFWs here in Singapore. The gathering was held in the condo-unit of one of my friends here in SG. It was a very exciting, engaging, and fulfilling get-together. I talked about the value of investing and the various types of investment vehicles. I hope to give the same talk to some more OFWs here, the friends of my friends. The timing couldn’t be any better because the fundamentals of the Philippine economy has never been this strong.
I wrote about my presentation on investing because all the participants have finally opened their first trading accounts. I received SMS from all of them yesterday asking for the next step. I’m super excited for them but a bit anxious at the same time because they have decided to invest in the stock market, hehe. I mean, there are the different MF programs out there that are less risky. Anyway, the idea is (and this is what I told them) to not put ALL their eggs in one basket. Cliché, I know, but I’m really hoping they got the message. My only rule is this (at least for newbies in the trade): only put the amount you are willing to lose — this is what I told myself last 2010, what I told my Dad, my aunts, and my friends back in UP whom I have also convinced to experience stock trading in the PSE.
Earlier, I received an email from the PSE, Inc. inviting me to attend the PSE-Bloomberg Conference that is going to happen here in Singapore on Thursday. Although the event is free of charge, it is by invitation only. I will try to gulp down whatever it is that will be discussed in the said conference; and, I will definitely share in this blog whatever it is that I can share.
The Philippines’ fundamentals remain solid, with progress toward investment-grade status noting economic reforms, improved governance and increased investment. The country’s growth drivers have become more diversified across industries, spanning from services (53% of GDP), industry(30%) and agriculture(10%). The government is working to attract investment in roads, railways and ports as a means of lifting the country’s growth potential to as much as eight percent. – PSE-Bloomberg
Pie Charting my Budget
I read somewhere that until you have around ₱5M in savings and stakes you should not go all-in in high-risk investing like, erm, stock trading. This is why in the past two weeks, I’ve been mulling over my own investment strategies. I hope to start and end the year right. The idea is to set detailed goals, to minimize errors. Last two years ago, all my savings and investments were placed in stocks alone. I was my own financial manager listening to some advice from friends every now and then. Although that has done me A LOT of good, I’m just realizing how precarious that was of me!
Although my portfolio as of 3:30pm today has already gained more than 10% since the beginning of the year, the performance of my holdings last week was way better than now. Talk about stochasticity! Believe it or not, I am only starting to see why it is still best to have some kind of bulwark, by placing the “eggs” NOT in just one basket. All I can say is that nothing beats having a peace of my mind.
My idea is to place my hard-earned money in both stocks and funds; moreover, I will also set aside something for health insurance. The budget allocation would look something like this
Budget proposal by self to self.
Of course, the bulk would still be placed in stocks because in the last two years, I have outperformed the market and the different MF firms. It would be disadvantageous if I reduced my exposure to stocks significantly.
What do you think?
