Mutual funds AUMs hit record P146 B

MANILA, Philippines - The country’s mutual fund industry has reached a record asset under management (AUM) worth P146.2 billion end 2012, or 41.1 percent higher than the P103.6 billion recorded in 2011.

“The mutual fund industry grew by 41.1 percent, one of the highest growth rates in the financial investment industry,” Fernando J. Sison III, chairman of the Philippine Investment Funds Association Inc. (Pifa) chairman, said. Sison is also president of BPI Investment Management Inc. (BIMI).

Pifa is the trade organization of the country’s fledging mutual fund industry.

There are four basic mutual funds, including the bond or fixed income fund, the equity fund, the balanced fund, and the money market fund.

The largest mutual fund in terms of net asset value is the bond fund worth P P78.1 billion end 2012, which grew by 28 percent higher from P61 billion in 2011. The bond fund is divided into peso-denominated, US dollar-denominated, and the euro-denominated funds.

The dollar-denominated bond funds are worth P16.8 billion, or 10.5 percent higher than the P15.2 billion in 2011.

But the fastest growing fund last year, is the equity mutual funds or funds invested in the stock market. Net asset value of the equity funds ballooned by over 79 percent to P38.2 billion end 2012 from the P21.3 billion the year before that.

Last year, the Philippine Stock Exchange Index (PSEi) broke records 38 times en route to delivering an annual return of 33 percent to become the second-best performing index in the Asia Pacific region. Last week, the index entered the 6,100-level for another record-setting pace.

The balanced mutual funds recorded a total net asset value of P29.2 billion end 2012, or 50.5 percent higher than the P19.4 billion in 2011. A balanced fund is a mix of investments in the bond and equity market.

The money market funds grew to P1.58 billion end 2012, or 35 percent higher than the P1.17 billion in 2011.

Meanwhile, total customer accounts ballooned to a record 166,097 customer accounts in 2012, from just 125,863 in 2011. It is also not surprising that the 38,014 accounts in the equity fund market recorded in 2011 expanded to 55,147 at the end of 2012.

A mutual fund is a registered company, which is basically a pool of funds from many individual and institutional investors, and managed by professional licensed fund managers.

Each fund is invested in stocks or equities, bonds or fixed income, balanced (a mix of equities and fixed income), and short-term money market instruments. These are generally peso-denominated although a few are US dollar or euro denominated.

It is marked-to-market or its rate of growth depends in the performance of the funds against prevailing interest rates and stock market movements. It does not “promise double-your-money.”

Majority of the fund managers of mutual funds have electronic platforms that allow daily monitoring of the performance of the funds.

Of the total 48 mutual funds, there are 10 equity funds, 13 balanced funds (three are foreign currency denominated), 21 bond funds (11 are foreign currency denominated), and four classified as money market funds.

The leading fund manager of the country’s mutual funds are BPI Investment Management Inc. (BIMI), PhilEquity Management Inc. (PhilEquity), Philam Asset Management Inc. (Pami), FMIC Asset Management Inc. (Fami), Sun Life Asset Management Corp. (Slamc), and Grepalife Asset Management Corp. (GAMC).