How to Invest in Philippine Mutual Funds Online

How to Invest in Philippine Mutual Funds Online

Investing in Philippine mutual funds has never been this easy with the advent of online platforms which allows you to invest in mutual funds directly right on your computer screen.

Unlike before where you’d normally go through an individual agent to buy mutual funds, two of the most popular online stock brokerage companies in the Philippines are now offering mutual fund too together with their primary stock brokerage business.

These two are COL Financial’s Fund Source and First Metro Securities’ FundSmart.

Why invest in Philippine Mutual Funds

A Philippine mutual fund is an investment company registered with the Securities and Exchange Commission (SEC), which pools money from many investors creating a big fund under a common objective of this fund. This fund is then invested in specific types of securities to achieve its stated objective. Economy of size makes this pooled fund as a whole “more powerful” than the initially isolated individual funds in achieving a common goal understanding the risks involved.

With the different possible goals for the fund,  four main types of mutual fund are offered:
Money Market Funds invest purely in short-term debt instruments (one year or less).
Bond Funds invest in “bonds” which are really long-term debt instruments offered by governments or corporations.
Balanced Funds invest in a mix of shares of stock and bonds.
Stock / Equity Funds invest primarily in shares of stock.

Investing in a Mutual Fund (under Balanced or Equity types) therefore is an easy alternative way to invest in the Philippine stock market which requires a lot less time and monitoring on your part.

Little time because you just basically “give your money” as your investment and let the fund manager do the job of judging where to invest it and subsequent monitoring. Compare this with direct stocks investing where you yourself does all the analysis (stocks selection) and trades (buy and sell) needed, something that would obviously demand more time from you,

Another good thing about Philippine mutual funds is you can start investing in it with as low as Php 5,000 only. There’s no required regular addition (or top-ups) but I’d personally recommend that you add regularly and really use it as your giant piggy bank for your long-term goals (at least five years).

Another advantage of mutual fund over direct stock investing is the diversification it offers. If you’re buying stocks on your own, your 5k initial capital can only buy at most two stocks. But when you buy a mutual fund, you’re actually effectively buying a basket of stocks and other securities like government/corporate bonds. Diversification is one common investment strategy in managing the risk for any investment.

One downside of mutual fund over stocks are the additional fees involved in mutual fund investing, such as management and front-end fees. Look at these costs as your “payment” for joining in the mutual fund and riding on the expertise of its fund managers.  The good thing about online mutual fund sellers is they are waiving (as of now) the normally charged front-end fees which means savings for you.

When it comes to possible returns on and of investment, with the very structure of the mutual fund, it’s easy to see that the main risk of losing money lies on the skills of its fund manager. A good way to judge this is to look at the consistency of the fund performance at least in the last five years. (Read >> Which is a better investment: Stock Market or Mutual Fund?)

There’s also typically a minimum holding period for your investment, some with as short as 90-days. You can always cash out your investment earlier than this but you’ll be charged an early redemption fee.

Other details about the mutual fund, such as its performance and portfolio mix can be easily found as part of the resources page of your online broker, like shown below.

How much you can earn

In terms of potential returns, mutual fund is ideal to be part of your long-term portfolio, typically with at least five years time horizon.

You can see below the historical performance of equity type mutual funds in different holding periods, 1 YR, 3 YR and 5 YR. It’s important to note though that just like in stocks investing, the returns of mutual funds are never guaranteed.

Mutual Fund Performance Table

How to buy Philippine mutual funds online

As I mentioned, you can buy mutual funds yourself via online brokers COL Financial and First Metro Securities.

COL Fund Source

COL Financial offers mutual fund through its COL Fund Source.
You can choose from 20+ of mutual funds offered by the top 6 mutual fund companies in the Philippines  with ZERO front-end fees.

With COL Fund Source, you can:

  • Access 26 Mutual Funds offered by the country’s top 6 Mutual Fund Houses
  • Invest in Mutual Funds with only PHP 5,000 to start
  • Invest in Mutual Funds without paying for the Front-End Fees
  • Automate your Mutual Fund purchases for regular investing, and
  • Monitor your investments anytime and anywhere

If you already have a COL Financial account, you can readily buy your first mutual fund.
To explore and start using COL Fund Source, log in to your COL Financial Account and just click on the Mutual Funds tab.

COL Fund Source

First Metro Securities – FundSmart

Another online broker offering mutual fund is First Metro Securities under the Metrobank Group. It’s practically the same as COL Fund Source, offering mutual funds from top six mutual fund houses and also has no front-end sales charges.

Mutual fund with First Metro Securities

If you already have an account in First Metro Sec, then you can also consider buying mutual funds online as part of your diversification.

Below is a sample portfolio holding mutual fund PSFG (PHILAM Strategic Growth Fund) managed by mutual fund company Philam Asset Management, Inc. I just bought this yesterday (April 28 2017) so you will see a tiny loss, but I expect this to give returns after some time which I will update here. 🙂

Final Comments

As a final note, while mutual fund is an excellent choice for passive investors who simply want to have greater returns than what banks can offer, it’s important to remember the importance of goal setting and risk assessment in every investment you’ll take.

Online brokers offering mutual funds normally have its risk assessment questionnaire that will help you decide which type of mutual fund is best for you based on your answers.

Additionally, before you invest, ask yourself the purpose of each of your investment.  This way, it will be easier for you to manage your investment (and your emotions) knowing its original intended purpose. Many newbies fall to the trap of losing this mindset when they start seeing losses even if it’s not yet done within their investing time frame. As with stocks, you’d need to allow your mutual investments to grow over time to achieve optimal returns for your goals.

Hope this helped you in your search of where to invest your hard-earned money.

If you’ve got more questions, you can send them to me through my contact page.

Have fun investing,
oMeng

Get stock picks straight to your email!


Did you like this article?

Don't miss out on my new posts. Subscribe to Smart Pinoy Investor by email and get my latest tips & updates! Click HERE! (it's FREE)

Avoid losing money and become a smarter investor!

Join my online training program for newbies(for OFWs too!) and learn how you can do stress-free investing!Click HERE!

Free Webinar - How to join investing in Philippine stock market for beginners!



9 thoughts on “How to Invest in Philippine Mutual Funds Online

  1. Pingback: How to Invest in Philippine Unit Investment Trust Fund (UITF’s) – Smart Pinoy Investor – Investing and Personal Finance for Pinoys

  2. Sherryl

    Hi Omeng,

    I found your page very helpful especially to for us, who have no idea about stocks at all.

    I’m interested in stocks investing but not sure which one will apply to me as a newbie. There’s EIP, mutual funds, buy and sell of stocks, etc.

    Could you please advise which one should i start with as a newbie?

    Many thanks for extending help by sharing your knowledge and opening doors of possibilities through your blog.

    Thanking you,
    Sherryl

    1. Omeng Tawid Post author

      Hi Sherryl, mutual funds would generally be the best place to begin, as you learn the ropes of self-directed investing through time while being exposed to the market through mutual fund investing.

      1. Sherryl

        Hi again Omeng,

        Many thanks for your prompt reply and helpful tips, greatly appreciated. I’ll try to attend the free seminar in COL regarding mutual funds.

        May God bless you in all your endeavors in life.

        Thanking you,
        Sherryl

  3. Pingback: Which is a better investment: Stock Market or Mutual Fund? – Smart Pinoy Investor – Investing and Personal Finance for Pinoys

  4. Pingback: A Review of Online Stockbrokers in Philippines – COL Financial, First Metro Securities, BDO Nomura, Philstocks, MakeTrade & BPI Trade – Smart Pinoy Investor – Investing and Personal Finance for Pinoys

  5. Jennifer Musallam

    Hi sir. I am a muslim and already started my stocks with Shari’ah approved ones (Halal companies). May i ask if there is specific mutual fund company that caters with halal stocks?

  6. Pingback: Four Simple Tips for Newbies in Philippine Stock Market – Smart Pinoy Investor – Investing and Personal Finance for Pinoys

Got questions? Leave your comments below.