How to Buy Mutual Funds in the Philippines

In: Mutual Fund Guides| Mutual Funds Articles

15 Apr 2009

The recent years witnessed the increase in the popularity of mutual funds in the Philippines. In case you’re wondering why, this is mainly due to the fact that most mutual funds offer a lot of advantages over a number of investment options.

But what are mutual funds and why do a lot of Filipinos consider it a sound investment? And how do you go choosing the best mutual fund for you? Let’s try to answer these questions by taking a closer look at the mutual fund industry in the Philippines.

Mutual Funds Defined

Although it may seem rather complicated, mutual funds can be defined in very simple terms. Simply put, a mutual fund is an investment company that puts together the resources of individual and institutional investors to accumulate a substantial asset base and then invest it in a diversified portfolio of security investments such as stocks and bonds for maximum gain. The professional fund manager may also decide to invest in some short term money market investments, other securities or assets, or a combination of some or all of these to achieve its goals.

Legally speaking, the investors are the rightful owners of the mutual fund company. The shares they purchased represent how big or how small their ownership is. Their shares likewise determine how much income they will ultimately generate from their investments.

So how do mutual funds generate income for its shareholders? Well, they do so in two ways. The first one is through the form of dividends and interests from its investments, and the other one is through capital gains (this happens when the value of the security increases). In any case, the mutual fund company will pass all net dividends, interests and profits to its shareholders in the form of distributions.

The Pros and Cons of Investing in Mutual Funds

Like all other investment options, mutual funds have their own unique pros and cons. On the positive side, mutual funds are managed by an experienced and capable fund manager who does all the heavy work for you – from researching and selecting the most suitable investment options to monitoring your investments. All you need to do is sit down, relax, and hopefully watch your money grow.

Your mutual fund manager will also ensure that your money is well protected from any unforeseen eventualities by spreading them across many different companies and sectors. As the saying goes – never put all your eggs in one basket!

Another attractive feature of mutual funds is their liquidity. Mutual funds are readily convertible to cash, whenever you may need it. Under existing laws, you can get your money within seven days of surrendering it but some companies can give you back your investments within the day!

And the best part is that most mutual funds require minimal investment. Some require as low as P5,000.00 to get you started, so even the average Juan dela Cruz can profit from this rapidly growing industry.

Now, it’s time to tackle some of the disadvantages of investing in mutual funds. Mutual funds may be a low or medium risk investment, but there’s always the possibility that you won’t get a positive return for your investment.

And because the fund manager is the one at the helm of control, you will not be involved in the decision-making process. All you can do is hope that your fund manager will make the best decision for you and the other shareholders of the company. There are also costs and fees involved when you decide to invest in mutual funds, and these can affect your projected returns, too.

You may also need to consider your timeline. Remember that mutual funds are best suited as medium to long term investment.

Taking all these factors into consideration, you can now have an idea whether investing in mutual funds is right for you. If you decide to give it a go, you now need to know the steps in buying a mutual fund.

Buying Mutual Funds

Now that the hard part is over and you have chosen the mutual fund company you are most interested in doing business with, you just need to fill up an application form provided by an authorized broker and you’re done! Depending on the company, you may also need to pay an entry fee.

Just remember, you need to take a proactive approach in monitoring your funds. After buying your shares, take time to learn more about mutual funds.

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  • 20 Responses to How to Buy Mutual Funds in the Philippines

    Avatar

    maria cesilia baua

    June 29th, 2009 at 7:38 pm

    I WANT TO INVEST IN MUTUAL FUND.

    Avatar

    maria cesilia baua

    June 29th, 2009 at 7:39 pm

    please give me the name of contact person and his no. for me to apply in mutual fund

    Avatar

    admin

    June 29th, 2009 at 7:48 pm

    If you happen to be close to a BPI branch, you can visit them and inquire. That’s the easiest way.

    Avatar

    shiela parreno

    July 26th, 2009 at 7:48 am

    i just would like to confirm.. i can go to any bpi branch and inquire how to invest in a mutual fund?tnx..i really really want to invest the soonest possible..tnx much

    Avatar

    admin

    September 2nd, 2009 at 1:47 am

    Yes. BPI is the easiest to go. But you can also go to any financial institution.

    Avatar

    ruby palma

    October 7th, 2009 at 9:33 am

    i want to know who will be the contact person in 1st metro..please email me rubytpalma@yahoo.com..tnx..

    Avatar

    adelio m. villegas

    October 10th, 2009 at 9:08 am

    what is the first step on how to invest in mutual fund? and how and when you can gain profit in it? i am interested and willing to learn. thanks!!!

    Avatar

    admin

    October 16th, 2009 at 3:24 am

    The first step is to find a financial institution of your choice.

    Avatar

    richard mariano

    November 4th, 2009 at 1:12 am

    i want to invest in a mutual fund or cash bonds

    Avatar

    ditas g.

    November 23rd, 2009 at 5:02 am

    Can u connect me on how to make a start or some guidelines in mutual funds investment.How much is the risk involved?

    Avatar

    admin

    December 1st, 2009 at 9:43 pm

    Mutual funds has very low risk. It is one of those investments that are sure to make money overtime. The more time it has, the larger your profits will be. So better start early. :)

    Avatar

    amelia

    December 2nd, 2009 at 2:15 am

    I want to know where to buy mutual fund? What is the percentage? when will it grow its interest?

    Avatar

    admin

    December 2nd, 2009 at 2:27 am

    You buy mutual funds on different financial institutions. The interest grows per month and year and the amount of interest depends on the condition of the stock market and financial institution you bought your shares in.

    But since mutual funds are pool of different kinds of stocks and investments, it is sure to grow steadily with low risk…

    Avatar

    Teresita

    December 25th, 2009 at 2:43 am

    I want to know ,ore about investing in mutual funds.

    Avatar

    Elvir Glenn

    December 27th, 2009 at 1:45 am

    So, what’s the best financial institution?

    Avatar

    johanna

    January 1st, 2010 at 12:16 am

    how_mush_is_the_minimum_investment_in_a-mutual_fund?

    Avatar

    Paco Avellana

    January 9th, 2010 at 6:05 pm

    If I invest in mutual UITFs, is the returns guaranteed per year? Is this linked to insurance?

    Avatar

    admin

    January 14th, 2010 at 9:44 am

    @elvir

    there is no best. Every company suffer losses and gains. You might want to do a research about different financial institution. The decision relies on you. Here are some of the top performers that you might want to look into.

    http://mutualfundsphilippines.net/top-mutual-funds-in-the-philippines-2009-1st-quarter/

    Avatar

    butch

    February 3rd, 2010 at 7:13 pm

    have you heard of Grepalife mutual funds? Any feedback? have seen their returns and quiteimpressive.

    Avatar

    admin

    February 4th, 2010 at 2:50 am

    @butch

    I have not tried or inquired about grepa life. But will do once I got the necessary funding. Anyone has review on grepa life?

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