Mutual fund industry posts 126% asset growth in 2002

The mutual fund industry registered a total assets of P25.808 billion in 2002, up by 126 percent from the P11.4 billion recorded in 2001.

Officials of the Investment Company Association of the Philippines (ICAP) said the mutual fund industry’s total assets could double this year to almost P50 billion.

A mutual fund is an investment vehicle that provides an opportunity for small investors to invest in the stock market. The fund, which is managed by a fund manager, pools institutional money with that of the small investors. It is divided into bonds, balanced, stock and money market funds.

Last year, the bond market exploded from a mere P8.423 billion at end 2001 to an unbelievable P23.5 billion for a 179-percent increase.

"It reflects the type of appetite the market has as the returns in the bond market have become more attractive over the rest of the investment field," ICAP said.

The balanced and stock funds as expected slipped in terms of net assets as the equities market remained in the doldrums.

The balanced fund net assets, a combination of equities and bond investments, decreased by 23 percent from P1.5 billion in 2001 to P1.15 billion. The stock fund net assets likewise shrunk by almost 29 percent to P1.14 billion last year from P1.47 billion in 2001.

A fourth mode of the industry is the money market fund, which was only introduced last year. It recorded net assets worth P9.4 million.

The major contributors to the country’s mutual fund industry are the Ayala Life Fixed Income Fund, the Philam Dollar Bond Fund, and the Sun Life Prosperity Bond Fund.

The four bond funds, in fact, accounted for over P21 billion of the industry’s total assets of P25.808 billion.