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How to Invest Online in Philippine Mutual Funds

(If you want a quick guide for beginners how to start investing in the Philippine stock market, you can download your free ebook here.)

How to Invest in Philippine Mutual Funds Online (for Beginners)

If you’re a Pinoy beginner who wants to know how to invest in mutual funds in the Philippines online, this tutorial will help you do that.

Investing in Philippine mutual funds has never been this easy with the advent of online stock brokerage platforms. This development allows you to invest in Philippine mutual funds directly right on your computer or even mobile phone.

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 investments together with their primary stock brokerage business.

These two online Philippine stockbrokerage companies are COL Financial’s Fund Source and First Metro Securities’ FundSmart.

Advantages of investing 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 allowing them to create a bigger fund under a common objective agreed by the investors. 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 fund goal understanding the risks involved. It reaps advantages as a whole as compared to a tiny isolated fund by itself.

With the different possible goals for a mutual fund,  four main types of a mutual fund are offered:

  • Money Market Funds invest purely in short-term debt instruments (time period of one year or less).
  • Bond Funds invest in “bonds” which are really long-term debt instruments offered by governments or private corporations.
  • Balanced Funds invest in a mix of shares of stock and bonds.
  • Stock / Equity Funds invest primarily in shares of equity or 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 “put down your money” as your investment and let the mutual fund manager do the job of finding where to best invest it and the needed subsequent monitoring. Compare this with direct stocks investing where you yourself (as the direct investor) do all the analysis (stocks selection) and trades (buy and sell transactions) needed, something that would obviously demand more time and skills from you.

Another good thing about Philippine mutual funds is you can start investing in them with as low as Php 1,000 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).

Still another advantage of a mutual fund over direct stock investing is the diversification it offers. If you’re buying stocks on your own, your 1k initial capital can only buy at most one company. This makes your whole funds very risky being dependent on a single company. But when you buy a mutual fund, you’re actually effectively buying a basket of stocks and other safer securities like government/corporate bonds. Diversification is one common investment strategy in managing the risk for any investment.

Risks in Mutual Fund Investing

One downside of a mutual fund over stocks is the additional fees involved in mutual fund investing, such as management and front-end fees. Look at these costs as your “payment for joining the group” and riding on the expertise of its fund managers.  The good thing about online mutual fund platforms like COL Financial & FirstMetroSec is they are waiving (as of now) the normally charged front-end fees which means more potential 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 in the skills of its fund manager in handling the fund. A good way to judge this is to look at the consistency of the fund performance at least in the last five to ten years. (Read related blog >> Which is a better investment: Stock Market or Mutual Fund?)

Minimum Holding Period in Philippine Mutual Funds

There’s also typically a minimum holding period for your Philippine mutual fund 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 – what assets and companies it has – can be easily found as part of the resources page of your online broker, like as shown below.

Investing in Philippine mutual funds online performance

How much you can earn investing in Philippine Mutual Funds

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

You can see below a representative historical performance of equity-type mutual funds in different holding periods, 1 YR, 3 YR, and 5 YR, as of December 15, 2016. It’s important to note though that just like in stocks investing, the returns of mutual funds are never guaranteed as this heavily depends on current market conditions.

Comparison Philippine Mutual Fund Performance Table

In the midst of the COVID-19 pandemic, for instance, mutual funds exposed to the stock market are one of those severely battered.
In the figures below as of March 5 2021, the YTD returns of these mutual funds are still negative with the economic recovery still underway.
However, for those with a long time horizon, this could actually be an opportunity to begin their investment journey at cheaper prices available.

 

You can watch this video giving you guidance on how to find the best performing mutual fund in the Philippines.

How to buy Philippine mutual funds online

As I mentioned, you can invest in mutual funds either thru ‘live’ agents or do it yourself via online brokers COL Financial and First Metro Securities.

Buying Philippine Mutual Funds in COL Fund Source

COL Financial offers mutual fund through its online platform COL Fund Source.
This platform becomes available to you right after opening an account with them.
You can choose from 20+ of mutual funds offered by the top 6 mutual fund companies in the Philippines and buy(invest in) them 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 1,000 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

You can also watch below video tutorial on how to buy/sell mutual fund shares in the Philippines with COL Financial Fund Source.

Buying Philippine Mutual Funds in 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 offers them with no front-end sales charges.First Metro Securities FundSmart tutorial

Mutual fund with First Metro Securities

If you already have an account in trading broker First Metro Securities, 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. 🙂

UPDATE: Below is its performance as of September 19 2017 (after less than five months).

UPDATE: Below is its performance as of October 19, 2017 (after less than six months).

performance mutual fund investment Philippines online

This day, I also redeemed my investments (converted to cash).
That is, my money has earned around 10% profit after less than six months (not bad!).

actual performance mutual fund investment online

You can sell anytime

This is another benefit of investing in mutual funds.
If you get the proper timing at the start and was able to invest during crisis prices (such as Covid-19 crisis in 2020), you can sell it very easily and have decent returns even in less than a year time by the time the markets makes a substantial recovery.

While mutual funds investing is designed for a longer time period of at least five years, traders can definitely still invest here with a shorter time-horizon.  This of course would need a bit of timing.

I shared below my most recent 2021 experience of selling my mutual fund investment to realize my gains.

Final Comments on Mutual Funds Investing

As a final note, while a 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.

Fortunately, and in line with government regulations, 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 to the questions.

Additionally, before you invest, ask yourself the purpose of each of your investments This way, it will be easier for you to manage your investment (and your emotions) knowing its original intended purpose. Many newbies fall into 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

P.S If you want to learn more about another type of pooled-fund investment for passive investors, you can watch the video below discussing UITF (Unit Investment Trust Fund) available in the Philippines.)



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This Post Has 37 Comments

  1. Miko I

    Hi sir omeng, pano at san ma do-download ang col fi ancial app? Para sa mobile? Am interested po?

    1. Omeng Tawid

      Hi Miko, i don’t think COL Financial has its mobile app available.
      Other brokers like 2TradeAsia have their mobile platform but not COL Financial yet.

    2. ed vergeire

      Hello po sir oming,good day po,can you help me or advice which mutual fund i shoul i buy? Last week lng po aku nag open ng COL account, i hope you can help me, Tnx po sir, God bless

    3. Omeng Tawid

      Philippine Equity index fund is a good start if you’re for the long-term.

  2. Nethan

    hello po, is it worth it po ba na magload para sa mutual fund?

    1. Nethan

      *magloan

  3. Remel tan

    HI Sir Omeng, kung mag iinvest po ako sa mutual fund anong companies ang nag bibigay nag dividend?

  4. Genny

    Hi Omeng please I’m interested sa mutual funds kindly help how to be part or member of mutual funds investors thank you

    1. Omeng Tawid

      You simply have to open an account with a mutual fund provider or easier way is to open an account with online mutual fund brokers like COL Financial or First Metro Securities.

  5. Archie

    Hello sir. Tanong ko lang po, meron din po ba fund manager pag sa col financing ako mag open?

    1. Omeng Tawid

      COL Financial has both stock market and mutual fund.
      If you will invest in Mutual Fund, then a fund manager will handle your investment.

      If you go directly buy stocks, then you will have to do it yourself, no fund manager who will manage it for you.

      Read >> here >> .

  6. Haruhi

    Hello, can you please advise what kind of Mutual Fund suits my retirement plan? Thanks.

    1. Omeng Tawid

      hello, this is a rather tricky question since this depends on market conditions among others. In general f you have time projection of at least 7-10 years, then equity type can be a good option.

    2. Maribel Cabrieto

      Hi sir
      How to invest po using equity/stock investment?
      Need ko po long term investment
      Kindly advise po anong magandang stock investment
      Thanks pp

    3. Omeng Tawid

      You can choose to buy index-type mutual fund.

Got questions? Leave your comments below.