The slow but sure road to prosperity

Mutual funds have always been known as the slow but sure route to long-term financial security. Because of their long-term investment strategy, they can take additional risks which can also dramatically increase the return on investment.

Among the newer offerings, the Prosperity Funds of insurance giant, Sun Life Financial of Canada, come across as absolutely focused on educating the firm’s target retail investors. The Philippine website of Sun Life Financial, www.sunlife.com.ph, devotes pages upon pages of copy to instruct the public on the nature of mutual fund investments and how they can be best used to secure one’s future.

The Sun Life Prosperity Funds refers to a family of mutual funds: the Prosperity Bond Fund, the Prosperity Balanced Fund and the Prosperity Philippine Equity Fund. As their names suggest, the bond fund is invested in government and corporate debt securities; the equity fund buys shares of stocks in Philippine corporations; and the balanced fund invests in a good blend of debts (bonds) and equity (stocks) from both domestic and foreign issuers.

Differences

Unlike other mutual fund companies in the Philippines, however, Sun Life Financial allows its investors to transfer their placements among the different Prosperity Funds without being subject to any charges or fees.

"Sun Life Financial believes that investors’ needs change over time and they should not be penalized for shifting from one fund to another if so dictated by their prevailing investment requirements. This is in accordance with Sun Life’s objective of being responsive to people’s needs," said Rolando Robles, president of Sun Life Asset Management Co., a wholly owned subsidiary of Sun Life Financial which distributes and manages the funds.

Sun Life Prosperity Funds require a minimum initial investment of P10,000 and subsequent investments in blocks of P5,000. An investor is given the option to pay the sales charge upon investing or to defer payment of the sales charge upon redemption.

Since mutual fund investors are encouraged to keep their investments in the fund for the long term, the rate of the deferred sales charge decreases on an annual basis, ranging from 6% to 1% during the first seven years and zero percent after that.

Bullish

Sun Life Financial executive vice-president for Asian Operations Douglas Henck remains bullish on the long-term prospects of the local capital market, in anticipation of a more stable economic and political environment.

In an article published in the Sun Life website, Henck said investor confidence in the local equities market is slowly being restored. "The Philippine mutual fund market will grow faster than the markets in America. We’re going to help the Philippines and the Filipino consumer to grow. We expect to be the leader in this market," Henck said.

Esther Tan, chairman of Sun Life Asset, wants the Prosperity Funds to play a significant role in the growth of the mutual fund industry and in ensuring the financing security of Filipinos. Her vision is financial freedom for Filipinos.

"We’d like to see Filipinos attain financial independence, in the sense that they don’t have to depend on their relatives or children in their old age. And mutual fund is one vehicle to achieve that."

Based on the October 2001 Mutual Funds Statistical Report, the Prosperity equity and balanced funds have the highest total net sales and the lowest redemption rates in the market. Prosperity ranks third among bond funds in terms of total net sales. It also has the lowest redemption rate in the market.

The record is quite a feat, considering the Prosperity Funds–launched only in April 2000– are the youngest in the industry. As of November 2001, total Prosperity Funds assets under management has reached over P1 billion.

The Sun Life investment management team in the Philippines, headed by Anthony Fenn, a Briton with over 35 years of investment experience, currently manages assets in excess of P24 billion. This amount includes investments from insurance and other financial products.

Growing

Robles believes the share of mutual funds in the Sun Life portfolio is bound to grow, as more and more investors learn about the many benefits of taking the slow but sure road to prosperity.

"Most Filipinos prefer and use financial products with guaranteed returns to meet their objectives. They are, however, beginning to realize that guaranteed return on investments may not be sufficient to meet their future financial needs because inflation erodes the value of their fund. It is now evident to them that significant returns can be gained by investment in securities like stocks and bonds to stem the adverse effects of inflation. And one easy way to do it is through a mutual fund investment," he said.

In the next five years. Robles expects mutual funds will be the choice investment vehicle for Filipinos. The market is on his side.