Sun Life fund group assets reach P2.9-B

The Sun Life Asset Management Co. Inc. (SLAMC) has total assets of over P2.9 billion as of the middle of November retaining its seat among the top five mutual fund companies in the industry.

SLAMC is a subsidiary of Sun Life of Canada (Philippines) Inc., which in turn is a member of the global financial institution, Sun Life Financial group of companies. Sun Life Phils. is the second largest life insurance company in the country.

Of the total assets, roughly P2.7 billion is in the bond market while about P100 million apiece are in the equity and balanced fund market. It has a market share of nearly 12 percent of the mutual fund industry and a little over 10 percent in the bond market.

It has a combined account base of roughly 10 percent of the 37,000 accounts of the entire industry.

Despite the pathetic performance of the stock market, SLAMC was able to register gains mainly from the balanced and bond funds.

Balanced funds are a combination of bonds and equities while bond funds are into low-risk, low yield government securities and corporate papers.

Eighty-percent of SLAMC’s investments are in treasury notes with a minimum parked in corporate accounts.

"There is a good reason for concentrating in treasury notes. The bond fund is designed to achieve an almost zero degree of default or risks, while corporates have a higher degree of defaults," SLAMC president Roland S. Robles explained.

The mutual fund chief said that they prefer treasury notes over treasury bills as returns are better despite the longer tenure. Bonds are low returns under longer periods but low in risk.

"We have to be very careful with our stakeholders money," Robles added.

The advantage of mutual funds is that they can directly participate in auctions thus getting better deals and better yields. "The only time we go to the secondary market is when there are no good auctions in the horizon."

Investing in mutual funds is considered a win-win situation. Asset managers do not own the funds but merely manages it. They are paid a management fee roughly equivalent to between one and a half to two and a half percent of the yield. It is fixed much like the commission given to stockbrokers in the equities market.

Thus the bigger the fund, the bigger the net earnings of the fund, and that also means bigger fees. The objectives of the client and the manager are the same.

When SLAMC was formed roughly two years ago, Sun Life Financial’s global fund operations were managing mutual fund assets worth over $140 billion from operations in the United States, Canada, the United Kingdom and India.

The country’s mutual fund industry registered a combined net asset of P23.63 billion end September according to the Investment Company Association of the Philippines (ICAP). The amount represents an all-time high for the 12-year-old non-banking financial sector.

The combined net assets represent a 107-percent increase from the P11.4 billion registered for the full year 2001.

Total equity investments made so far reached P2.22 billion after the first nine months of the year against the highest ever experienced by the fledgling financial industry.

A mutual fund is an investment vehicle that allows small investors the opportunity to invest in the stock market. The fund, which is managed by a fund manager, pools institutional money with that of the small investors.

Small investments generally mean a minimum of P5,000 can be placed in mutual funds.

There are 22 mutual fund companies classified as equity or stock funds, balanced funds, bond funds, and money market funds. There are five equity fund firms, 10 balanced funds, six bond funds and one money market fund.

By its title, the equity fund invests purely on the equities market while the bond market concentrates on the commercial and government bond market. The balanced fund distributes its pooled money in both markets while the newly-formed money market keeps investments with the currency market.