The country’s mutual fund industry posted assets under management (AUM) reaching P245 billion in the first quarter this year, higher by 22.5 percent than the P200 billion in the fourth quarter last year.
Chartered Financial Analyst (CFA) Society Philippines Board Adviser Marvin Fausto said this translates to compounded annual growth rate of 24 percent the past five years.
He said the popularity of retail class mutual funds are increasing as more Filipinos are getting richer who want to invest in financial instruments that yield higher returns than the banks’ deposit rates.
He said investing in banks would give only 0.25-percent interest rate for a savings account and less than 1 percent for time deposits.
“People should invest in investment outlets with high interest rates or a higher level of return, particularly bonds and stocks,” he told the
BusinessMirror.
He said more Filipinos are accessing the products offered by fund houses. They are aware that any investment has risks and that different investors have different tolerance levels for the risk involved.
The money-market fund, for instance, he said, has the lowest risk. Bond mutual funds have medium-level risks, while equity funds have the highest.
Fausto expects more competition among fund managers as foreign insurance players are entering the Philippine market.
“The local insurance companies have a lot of agents. Foreign insurers will have to capitalize and hire people to compete with the locals,” he said.
The pricing of the products is the same. “We will be seeing that the management fees and agent’s fees will go lower. That’s the effect of competition,” he said.
He said the competitive advantage of the local fund managers over the foreign players is distribution.
“We have a bright future ahead of us. Invest in the stock market, invest in bonds and hopefully we’ll have a better future for Filipinos,” he said.