Showing posts with label Mutual Fund. Show all posts
Showing posts with label Mutual Fund. Show all posts

Friday, 24 June 2016

My Notes from the Philippine Retail Investment Conference 2015

07:21:00
Last May 16, 2015, I attended the Philippine Retail Investment Conference 2015, an event presented by the CFA Society of the Philippines. Ticket price for the event is 2500 Pesos, but through the generosity of COL Financial, COL clients (like me) were able to attend the event for free. Thank you Uncle Edward Lee! :)

In line with my advocacy to spread financial education, I would like to share my notes to my blog readers. Although not complete, I believe readers should be able to learn a thing or two from this. 



Speaker: Mr. Hans Sicat, President of the PSE
Keynote Speech

The PSE is taking part in the Invest Asean initiative.
The "Invest ASEAN" intiative includes:
- an ASEAN Exchanges website
- the creation of an FTSE ASEAN Index series
- an ASEAN trading link. 

Right now, the ASEAN trading link only involves 3 markets -- Malaysia, Singapore and Thailand. Basically, a trader/investor in one country can now easily buy shares of stocks in another country. This is good news especially to those who want to diversify in the global market. The Philippines, together with 2 more countries, are expected to be included on the next batch.

PDS stake acquisition
According to Mr. Sicat, the PSE is also getting involved in the bond market through the Philippine Dealing System (PDS). With the acquisition of the majority shares of PDS, we can look forward to lower fees for the bond market.


Speaker: Robert Stammers, CFA
Topic: Retirement Security Problem

Longevity Risk
Longevity risk is living past the life of your useful assets (or what you've saved for your retirement). Based on statistics, life expectancy for men is now at 78, while 80 for women. With the advancements in the field of medicine, people are now living longer (and this means you need to save more for your retirement).

On developing fiscal discipline
- create a household budget 
- learn to save before you spend
- track your spending
- build an emergency fund (3-6 months of monthly household expenses)
- keep the cost of your lifestyle constant (put windfall income to savings/investment)
- manage your debt (before pursuing the savings plan)

Investment Tips
- Diversify on global stocks and bonds for risk mitigation
- Make consistent capital contributions -- if you keep on waiting for the right timing, there's a higher chance that you'll miss out the best days of the market
- Purchase low cost financial products (in terms of management fees and other charges)
- Think long term (financial planning is a marathon, not sprint). It takes 20-25 years to establish fund for 20-25 years of retirement.


Speaker: Tolmas Wong, CFA
Topic: IPS - Investment Policy Statement

On Diversification
Diversification without really thinking is like building a zoo. When diversifying, ensure that when an assett class goes down, another one will go up to offset the losses.

On Market Timing
You can't time the market. For most average investors, regular saving and regular investing is recommended.

Pitfalls in retirement planning
- Too little -- magic of compounding will wane
- Too late
- Too conservative
- Too haphazard -- leaving everything to chance

On cutting losses 
Cutting losses at 10% compared to cutting when you're already down 50% gives you a better chance of recovering faster. Take note that if you cut when you're already down by 50%, that means you need to gain 100% in order to breakeven.


Panel Discussion
Topic: Frauds, Scams and Consumer Protection

On Investment Scams
There are 37 pending cases in court related to investment scams.

The public is not vigilant on the products that they invest in. Before going into an investment scheme, ask yourself: Why is it giving returns better than the market?

Common investment scams:
- Pyramiding scheme (sellling/recruiting)
- Ponzi Scheme/Affinity Scam

From SEC Chairperson Teresita Herbosa: Based on the Supreme Court Decision, even if you're not the the mastermind of a scam, even if you're just an employee or just tasked to make the presentation, you are considered as an ostensible agent for the mastermind and will be held liable for the violation of the securities law. 

How to report a scam:
SEC - you can even use a dummy email if you want to maintain anonymity
BSP - Financial Consumer Department

Check "Alerto Ako" for tips.


Speaker: Robert Ramos, CFA
Topic: 12 Common Mistakes in Investing

1. No investment strategy

2. Investing in individual stocks instead of in a divesified portfolio of securities
     - mutual fund diversification is not portfolio diversification
     - by investing in same investments from different banks, you are over-diversifying
3. Investing in stocks instead of in companies
4. Buying high (avoid performance chasing. Instead, invest in the asset because of the sound fundamentals)
5. Selling low (due to holding on to investments, so make sure to have a stop loss)
6. Churning your investments (frequent trading cuts into investment returns)
7. Acting on tips and sound bites
8. Paying too much in fees and commissions
9. Decision making by tax avoidance (tier 2 investments are exempted from tax)
10. Unrealistic expectations
11. Neglect (failing to begin investing due to lack of knowledge)
12. Not knowing your investment risk tolerance

Should i have stop-loss for UITF and MF? 
You must have stop-loss for everything, especially if you'll be needing the money in the near future.


Panel Discussion
Topic: Risk and return outlook of stocks, bonds, properties and private equity

4Q 2015 or 1Q 2016, most likely bond rates will increase

Is there a property bubble in the Philippines?
Not really. Real estate, in the next 3-5 years, is a good investment

On Private equity  
Involves companies that are not publicly listed (illiquid and for long term). Minimum investment is 1 million dollars

Investment Tips
If you're still young, allocate more on growth assets (60-70% on equties). If you're older, objective is capital preservation.

It's time, not timing, that determines your personal wealth.

In case of fed rate hike, buy on dips.

When interest rates go up, it's bad for the real estate market.

If you have 50K pesos, you may invest 100% equities, BUT "It's not your age that matters, but when you'll need the money".

How much of your monthly salary should go to mortgage? -- Not more than 25%

Outlook for 2016 election and how it will affect the stock market? -- 70% of filipinos contribute to consumer spending. Regardless of the president, Filipinos will still spend.


Speaker: Marvin Fausto
Topic: Analyzing Mutual Funds

Balance Qualitative vs. Quantitative
Qualitiative
1. Why (Your purpose? Your goal? Emergency fund? College education? Vacation?)
2. Who (Fund house? How long the fund is in existence? How long has the fund manager been overseeing the fund?)
3. What (Investment objective of the fund? What kind of investment will the fund invest in? What is the investment style? What is their process in choosing investments?)

Quantitative
1. Performance -- historical performance
2. Risk -- standard deviation of returns
3. Risk / Return - Sharpe ratio (formulated by William Sharpe)
4. Fees - expense ratio

COL Fund Source
Participating Mutual Fund Companies:
SunLife Financial
Philequity
ATR Kim Eng
ALFM
FAMI
Philam Asset Management

There are 24 mutual funds offered in the COL Fund Source.

According to studies, only 6% of those who learned Financial Literacy improved.

Difference between Mutual Fund and UITF
UITF is being regulated by the Central Bank. MF is being regulated by the SEC.


Speaker: Noor Quek
Topic: Preserving Family Wealth Through Generations

Is it ok to transfer your assets to your children while you are still living?
Although it can show how much you love your children, it was suggested that parents should also learn how to use and spend the wealth they've established, after all, they've worked for it for many years. It's just right that they also reward themselves. As long as they were able to give their children good education and taught them the right values, that should be enough. Children must also learn how to work for themselves.

The problem with transferring the assets too early
If you give your assets too early to your children, in case the child dies, you'll have a problem taking back what you gave him/her. Problems can arise especially if your child is already married. Your wealth will surely go to the spouse.

From clogs to clogs
This often happens: parents start from scratch, children inherit the wealth, then spend the family's wealth.

On passing your business to your children
Parents should not force their children to take on their business, especially if that's not what they want to do. In addition, parents should know when to act as business owner and as parent to their children.

If the parent thinks that his/her children cannot handle the business, it's ok to just sell the majority part of it, but still holding on to substantial number of shares, so the parent will still be able to receive earnings.

From Ms. Rose Fausto: For the money you receive for your child, put it in a savings account (or investment) so it won't comingle with your money.

Why would people sell their shares for a lower price?

07:21:00
A college freshman who is planning to invest in mutual fund asked me:
Why would people sell their shares for a lower price? Wouldn't a share increase its price once it has decreased? Why not just simply wait for the price to increase from the day you bought it?

Below is my reply to him. Please note that the concept not only applies to mutual fund, but also to stocks and UITF.

Here's the thing, there are investors who believe that "time" is essential in growing their wealth, while some think that "timing the market" can grow their wealth faster. For the former, it means that the investor is committed to hold on to the investment for a long time, ignoring the up and down movement of the market, believing that after several years, the share price has increased already (historically speaking, for stocks and equity funds, prices have increased, especially if invested for at least 5 years). For the latter, investors prefer to redeem their investment to save whatever profit is remaining, preserve their capital, then just subscribe again once the market has stabilized. Others choose to sell, even at a loss, hoping that prices will fall down further, then once the price rebounds, they will enter again. For those trying to "time the market", the idea is to be able to buy more shares at a lower price given the cash you have (it also gives you the opportunity to start gaining as soon as the market goes up again, unlike those who held on to their shares and waiting for the price to breakeven). Another reason why an investor will sell at a loss is because he/she desperately needs the money.

Ideally, timing the market puts you in a better position to gain more using the money you have. HOWEVER, not everyone can time the market perfectly. This leads to some investors missing the big rebound and eventually re-entering at a higher price. Some of them who have seen that prices are higher now (compared to their selling price last time) hesitate to re-enter, thinking that the price is too high already (therefore, higher risk for their money). If the market goes on a big rally again, there's a high chance that they'll be left behind and regret the decision.

I've experienced being in both positions. I tried to time the market several times, and regretted the decision in some instances. Honestly, my Sunlife MF which I got in 2006 (and still holding) is giving me better profit percentage, compared to my "timed" investments. That's why I agreed with a financial speaker when he said that "It's time, not timing, that determines your personal wealth". Right now, I'm building an elementary, high school and college fund for my 1 year old son, and I'll honestly say that I'll bet on "time" this time (i'm subscribing to two BPI Equity UITFs every month). 

Are you Aggresive or Conservative? Take the Risk Profile Assessment now!

07:20:00
A Risk Profile Assessment helps in classifying the type of investor you are, based on your risk appetite. It guides you in determining investments that are best suited to your investment objectives, risk tolerance, preference and experience.

Here's a simple questionnaire to determine your investor risk profile.

1. Investment Objective: What is your key investment objective?
A. To protect principal amount of investments and earn steady stream of interest income.
B. To preserve capital or real value of investments.
C. To achieve growth through a balance between interest income and capital gain over a medium term period.
D. To achieve significant growth or capital appreciation over the medium to long term period

2. Investment Horizon: What portion of your investment can be placed in medium or long term investments, i.e., more than 3 years?
A. 10% to 30%
B. 40% to 60%
C. 70% to 80%
D. 90% to 100%

3. Liquidity: Do you have regular liquidity requirements?
A. I need to draw regular income from my investments and may use a portion of the principal in the short term.
B. I do not need to draw regular income from my investments nor do I see the immediate need to use any portion of the principal in the short term.
C. I have other sources of liquidity and do not see a real need to use funds for the next 5 to 10 years.
D. I have other sources of liquidity and do not see a real need to use funds for the next 10 years.

4. Investment Knowledge and Experience: What is your knowledge and experience on investments?
A. Minimal. I know bank deposits, BSP SDA, T-bills and money market placements.
B. Low. Outside deposits and short term government securities, I have experience investing in money market funds such as corporate bonds and fixed income bonds.
C. Medium. I have experience investing in mutual funds, UITFs, foreign currencies and direct investment in listed stocks and bonds.
D. High. I have an extensive experience in investing and have a broad understanding of the domestic and global capital markets in general.

5. Investment Experience: How many years of experience have you had investing in securities, either directly or through a fund manager?
A. 1 year or less
B. More than 1 year up to 5 years
C. More than 5 years up to 10 years
D. More than 10 years

6. Risk Tolerance: What is your tolerance for risk?
A. I accept steady and minimal returns without any fluctuation in the principal amount of my investments.
B. I accept minimal fluctuations in the principal amounts of my investments for commensurate returns.
C. I accept a fair amount of fluctuation in the principal amount of my investments in order to achieve above average returns and capital growth over the medium term.
D. I am prepared for a high degree of volatility and possibly losses for certain periods in the principal amount of my investment in order to achieve high returns or capital growth over a period of 5 years or more.

7. Risk Tolerance: If the value of your portfolio decreased by 20% in one year, how would you react?
A. I will be very concerned and will immediately put my investment back to cash (i.e. in the form of deposits and/or short term government securities).
B. I will be very concerned and will find safer investment outlets, which are not necessarily cash.
C. I will be concerned and will review the aggressiveness of my portfolio.
D. I will NOT be concerned about the short-term fluctuation of certain investments in my portfolio.

8. Risk Tolerance: What is your average net worth for the last 2 years?
A. P 5 M (USD100,000) and below
B. Over P 5 M (USD100,000) up to P 30 M (USD600,000)
C. P 30M up to P 60 M (USD1.2M)
D. Over P 60 M

Source: Bank of the Philippine Islands

How to Score:
Each "A" answer corresponds to 5 points, "B" corresponds to 10 points, "C" corresponds to 15 points, "D" corresponds to 20 points.

Investor Type Classification:
Conservative (1 - 70 points)
If you're the conservative type, it is suggested that you invest only in Money Market Fund UITF or Mutual Fund (MF). This type of UITF/MF has the lowest risk. The probability of losing money in this fund is small, however, the return is also not that high (can have an ROI of less than 2%, based on 2014 year-end data). 

Moderately Conservative (71 - 100 points)
If you're the moderately conservative type, it is suggested that you invest in Bond Fund UITF/MF . It still has relatively low risk, but with slightly higher return (can have an ROI of around 4%, based on 2014 year-end data).

Moderately Aggressive (101 - 130 points)
If you're the moderately aggressive type, you may already consider a Balanced Fund UITF/MF. With this type of UITF/MF, a major part of your investment is already exposed to stocks, giving you the possibility of a higher return but also with a higher risk (can have an ROI of around 28%, based on 2014 year-end data).

Aggressive (131 - 160 points)
If you're the aggressive type of investor, an Equity Fund UITF/MF will suit you. With this type of UITF/MF, your investment is fully invested in stocks. But since stock prices fluctuate based on market sentiment, the possibility of losing money is highest with this type of fund. However, it also gives you the possibility of highest return, especially if the fund manager's stock picks are good (can have an ROI of around 48%, based on 2014 year-end data).

Additional Notes from MYPG
The Investor Type you fall under doesn't restrict you from subscribing to a UITF or Mutual Fund that entails higher risk. For example, if you really want to subscribe to a Balanced Fund or Equity Fund UITF eventhough you're a moderately conservative investor, the bank will allow you to do so, but you have to sign a waiver. Just always remember, the higher the risk, the higher the reward.

Top Equity Mutual Funds in the Philippines (as of May 29, 2015)

07:16:00


Aside from Cocolife's United Fund, Inc., BPI's ALFM Philippine Stock Index Fund also outperformed the index by finishing the week with 5.19% YTD.

Despite of the 2.94% drop of the index last week, it' nice to see that most of the local equity mutual funds are still doing well. 

Other funds that ended in the Top 5 include Philequity PSE Index Fund Inc. (4.17%), ALFM Growth Fund, Inc (3.98%), and Philam Strategic Growth Fund, Inc. (3.12%).



If we are to compare the best Equity Mutual Fund with the best Equity UITF, we'll see that BPI Philippine High Dividend Equity Fund performed better than Cocolife's United Fund, Inc., by finishing the week with 6.79% YTD. To view the Equity UITF Performance Report, click here.


Disclaimer:
The analysis posted is for informational purposes only and should not be taken as a recommendation to buy or sell a particular fund. As with any investment, past performance is not necessarily indicative of future performance. MYPG assumes no responsibility or liability for your trading and investment decisions and results.

Some of my figures don't match the values in pifa.com.ph. Please note that for accuracy of data, I retrieved the NAVPS values from the funds' respective website.

For the Soldivo Strategic Growth Fund, Inc., the Soldivo website doesn't contain the historical and current NAVPS. I just derived the December 29, 2014 NAVPS based on the current NAVPS and YTD posted in pifa.com.ph.

Top Equity Mutual Funds in the Philippines (as of May 15, 2015)

07:15:00
As of May 15, 2015, BPI's ALFM Philippine Stock Index Fund is the best performing equity mutual fund in the Philippines, gaining 9.34% since the start of the year. It has outperformed the PSEi, which ended the week with 9.01% YTD.

Other funds which ended at the Top 5 include Cocolife's United Fund, Inc. (9.18%), ALFM Growth Fund, Inc (8.67%), Philequity PSE Index Fund Inc. (8.31%), and Philam Strategic Growth Fund, Inc. (6.9%).



If we are to compare the best Equity Mutual Fund with the best Equity UITF, you'll see that BPI Philippine High Dividend Equity Fund performed better than ALFM Philippine Stock Index Fund, by finishing the week with 10.46% YTD. To view the Equity UITF Performance Report, click here.


Disclaimer:
The analysis posted is for informational purposes only and should not be taken as a recommendation to buy or sell a particular fund. As with any investment, past performance is not necessarily indicative of future performance. MYPG assumes no responsibility or liability for your trading and investment decisions and results.

Some of my figures don't match the values in pifa.com.ph. Please note that for accuracy of data, I retrieved the NAVPS values from the funds' respective website.

For the Soldivo Strategic Growth Fund, Inc., the Soldivo website doesn't contain the historical and current NAVPS. I just derived the December 29, 2014 NAVPS based on the current NAVPS and YTD posted in pifa.com.ph.

Top Equity Mutual Funds in the Philippines (as of May 22, 2015)

07:15:00
As of May 22, 2015, Cocolife's United Fund, Inc. is the best performing equity mutual fund in the Philippines, gaining 8.39% since the start of the year. It has outperformed the PSEi, which ended the week with 8.02% YTD.

Aside from Cocolife's United Fund, Inc., BPI's ALFM Philippine Stock Index Fund also outperformed the index by finishing the week with 8.35% YTD.

Other funds that ended in the Top 5 include Philequity PSE Index Fund Inc. (7.19%), ALFM Growth Fund, Inc (6.95%), and Philam Strategic Growth Fund, Inc. (5.8%).


If we are to compare the best Equity Mutual Fund with the best Equity UITF, you'll see that BPI Philippine High Dividend Equity Fund performed better than Cocolife's United Fund, Inc., by finishing the week with 9.77% YTD. To view the Equity UITF Performance Report, click here.


Disclaimer:
The analysis posted is for informational purposes only and should not be taken as a recommendation to buy or sell a particular fund. As with any investment, past performance is not necessarily indicative of future performance. MYPG assumes no responsibility or liability for your trading and investment decisions and results.

Some of my figures don't match the values in pifa.com.ph. Please note that for accuracy of data, I retrieved the NAVPS values from the funds' respective website.

For the Soldivo Strategic Growth Fund, Inc., the Soldivo website doesn't contain the historical and current NAVPS. I just derived the December 29, 2014 NAVPS based on the current NAVPS and YTD posted in pifa.com.ph.

Top Equity Mutual Funds in the Philippines (as of April 30, 2015)

07:14:00
As of April 30, 2015, ALFM Growth Fund came out as the best performing equity mutual fund in the Philippines, gaining 7.25% since the start of the year. It has outperformed the PSEi, which ended the week with 6.7% YTD.

It's another 1-2 finish for BPI-ALFM, with the ALFM Philippine Stock Index Fund ending the week with 6.86% YTD.
Other funds which ended at the Top 5 include Cocolife United Fund, Inc. (6.43%), Philequity PSE Index Fund Inc. (6.00%), and Philam Strategic Growth Fund, Inc. (5.21%).



If we are to compare the best Equity Mutual Fund with the best Equity UITF, you'll see that BPI Philippine High Dividend Equity Fund performed better than ALFM Growth Fund, by finishing the week with 7.92%% YTD. To view the Equity UITF Performance Report, click here.


 
Disclaimer:
The analysis posted is for informational purposes only and should not be taken as a recommendation to buy or sell a particular fund. As with any investment, past performance is not necessarily indicative of future performance. MYPG assumes no responsibility or liability for your trading and investment decisions and results.

Some of my figures don't match the values in pifa.com.ph. Please note that for accuracy of data, I retrieved the NAVPS values from the funds' respective website.

For the Soldivo Strategic Growth Fund, Inc., the Soldivo website doesn't contain the historical and current NAVPS. I just derived the December 29, 2014 NAVPS based on the current NAVPS and YTD posted in pifa.com.ph.
Subscribe to: Posts (Atom)

Recent Posts

Posts

Contact Form

Name

Email *

Message *