Earlier this week, I received a comment regarding the comparison between Security Bank's Peso Equity Fund and BPI's Equity Value Fund. I felt it deserves to have its own entry, so here it is.
Reader wrote:
I have been looking at the past performance of BPI equities vis a vie SB. With the exception of the BPI high dividend fund, i think if one invested on both equities since its inception one would have made more money with SBs equities as compared to BPI especially the equity value fund which has a major loss of NAVPU value last 2005.
Here's my take:
Although, you can consider the performance of a fund since inception, all it will be is just a reference, and it is not a guarantee that the fund will perform well in the current year (of course, you have better chances of earning if your fund has done well historically).
Let me post some figures taken from the BPI Asset Management and Security Bank websites. For our comparison, let's use BPI's Equity Value Fund and Security Bank's Peso Equity Fund.
BPI Equity Value Fund
Inception Date: April 4, 2005
NAVPU on inception date: 50.85
NAVPU as of March 10, 2015: 168.26
ROI% since inception date (as of March 10, 2015): 230.89%
Security Bank Peso Equity Fund
Inception Date: February 1, 2010
NAVPU on inception date: 1.00
NAVPU as of March 10, 2015: 2.702994
ROI% since inception (as of March 10, 2015): 170.2994%
The comparison of ROI since inception is not fair, however, since BPI Equity Value Fund started in 2005, while Security Bank Peso Equity Fund only started in 2010. Therefore, let's use February 1, 2010, the inception date of SB Peso Equity Fund, as the reference start date of BPI Equity Value Fund.
BPI Equity Value Fund
NAVPU as of February 1, 2010: 70.83
ROI% as of March 10, 2015 starting from February 1, 2010: 137.55%
As we can see, you are correct, SB Peso Equity Fund appears to be better than BPI Equity Value Fund. We all know the good performance of SB Peso Equity Fund in 2014, and it has contributed largely to its ROI since inception date. It has significantly outperformed the PSEi at the end of 2014, and this is not usual. On the other hand, BPI Equity Value Fund was at par with the PSEi. Security Bank's fund manager definitely did a good job with his stock picks (with some luck on the side).
Let's backtrack a little and see the performance of the 2 funds at the end of 2013.
BPI Equity Value Fund
NAVPU as of December 27, 2013: 125.94
ROI% as of December 27, 2013 starting from February 1, 2010: 77.81%
Security Bank Peso Equity Fund
NAVPU as of December 27, 2013: 1.776863
ROI% as of December 27, 2013 starting from February 1, 2010: 77.69%
The figures are interesting. As we can see, the ROI of the 2 funds are almost identical, with BPI leading by a very small margin. With this, we have confirmed that the 2014 performance of SB Peso Equity Fund had a lot to do with its ROI since inception.
Let us now compare the performance of the 2 funds, based on their March 10 YTD% in 2014 and 2015.
BPI Equity Value Fund
YTD% as of March 10, 2014: 9.15%
YTD% as of March 10, 2015: 8.35%
Security Bank Peso Equity Fund
YTD% as of March 10, 2014: 11.54%
YTD% as of March 10, 2015: 2.58%
Based on the figures above, it appears that BPI Equity Value Fund is doing a more consistent job. But don't take the figures too seriously, SB Peso Equity Fund might still be able to pull off a surprise during the remainder of the year.
Conclusion:
While it is a good thing that you check a fund's performance since its inception date, it is not a guarantee of the fund's performance in the current year (as well as in upcoming years). That's why you'll always see this in disclaimers for UITF and MF forms, leaflets, and price calculators. The performance during the current year is what will matter to a new investor. And the success of a fund will depend largely on the fund manager's stock picks (and some luck too).
Disclaimer:
While I have several BPI UITFs that I have acquired in the last few years, I am in no way connected to BPI. In fact, early this year, I also invested in Security Bank's Peso Equity Fund, betting that it will carry forward its good performance in 2014. With close to 9 months remaining in the year, all I can do is wait and see if they'll be able to pull another surprise (hoping for a positive one). I plan to hold this for 3 years or more so I'm not really concerned of their performance as of now.
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