FAMI urges further savings, investments

MANILA, Philippines - With projections of five-to-seven percent growth for the country’s gross domestic product (GDP) in 2011, the FMIC Asset Management Inc. (FAMI) is advising domestic institutional and individual investors “ to keep the placements or savings coming.”

FAMI is the fund management arm for mutual funds of First Metro Investment Corp. (FMIC), which in turn is the investment arm of the Metrobank Group of Companies.

According to FAMI data, the business expectation index has zoomed to a high 50.6 percent, and investor and consumer confidence just keep increasing. Remittance from overseas Filipinos continuous to threaten to break the double-digit level in terms of growth, and deploys grows unabated.

FMIC executives reported that listed companies at the Philippine Stock Exchange (PSE) reported higher profit margins last year, and the peso remains strong. Interest rates remain low, net borrowings are increasing, and inflation remains benign.

Meanwhile, FAMI executive vice president and chief operating officer Hector de Leon encourages investors to keep making placements in mutual funds.

Mutual funds are a pool of funds where investments as low as P5,000 can be initially opened. The funds are managed by competent fund managers, and overseeing money placed in equity funds, fixed income or bond funds, balanced funds (a mix of equity and fixed income), and money market funds.

For investors that are short-term and risk adverse, the fixed income funds may be ideal. For those who risk takers and long-term in horizon, the equity funds are the preferred option.

The best of both world albeit medium in returns can invest in balanced funds, while the money market are extremely short term with low but safe returns. Whichever is the option, De Leon advises investors to invest regularly to get the best results.

Regular placements, say on a bi-monthly or monthly basis, increases the chance of better results in the long term. It also serves for long-term savings. FAMC has a large investor base of teachers and non-academic school personnel that have made salary deduction arrangements with the fund manager.

De Leon revealed that in 2008 when the stock market was weak and a lot of investors stood at the sidelines, teachers were placing funds when the net asset value per share (NAVPS) of the funds were at their lowest. Today, the NAVPS may be over 25 to 50 percent higher in value.

“Due to regular placements the funds grew, the investor got the benefit of cost averaging. They took advantage of low fluctuations,” the FAMC COO explained.

Mutual funds help improve national savings, it supports the country’s capital markets, and increases domestic investments.

The assets under management (AUM) of the country’s mutual fund industry is reportedly over the P90-billion level at the end of 2010. The previous high occurred in 2007 where the AUM reached P89 billion.

FAMI is a major player in the industry with total AUMs amounting to P3.3 billion, its highest so far. Of the total, P1.7 billion are placed in the equities fund, P998 million in the fixed income fund, P464 million with the balanced funds, and P202 million with the money market fund.

Year-on-year, the fixed income fund grew by 11.56 percent, the money market fund by 1.36 percent, the balanced fund by 61.97 percent, and the equity fund by 63.37 percent. De Leon’s advise for investors in 2011, “is to just keep on investing.”