Which are the best mutual funds in the Philippines?

There are several types of mutual funds present in the Philippines. We need to know the features of each type of funds in order to know which of them suit our needs and our personalities. There are four fundamental types of mutual funds, namely, the stock funds, the balanced funds, the bond funds, and the money market funds. Let's tackle the first three types of mutual funds and enumerate the best mutual funds present in the Philippines.

Another term for stock funds is equity funds. From the term itself, this type of mutual fund is consisted of investments of clients placed in pure equities or stocks. It is like investing indirectly in the stock market. Instead of monitoring the stock market on a daily basis, there is an asset management company or a fund manager managing the funds for the clients. Investing in stock funds is very risky since the performance of the stock market is very volatile. However, there is a truth in the saying that "the higher the risk, the higher the return." In most cases, those who invest in stock funds are long time investors who have been very experienced in making long-term placements. In the Philippines, the best mutual funds under this classification include Philequity Fund, Philequity PSE Index Fund, First Metro Save and Learn Equity Fund, Philippine Stock Index Fund, Philam Strategic Growth Fund, United Fund, Sun Life Prosperity Phil. Equity Fund, ATR KimEng Equity Opportunity Fund, and DWS Deutsche Philippine Equity Fund.

Bond fund is another type of mutual fund. If a stock fund is a very risky financial vehicle, bond fund is the opposite of it. Instead of having the funds invested in stocks, investments of bond fund clients are invested in such vehicles as corporate bonds, Treasury Notes, Treasury Bonds, Agency Bonds, obligation bonds, and revenue bonds. When bond funds were first introduced in the Philippines, many conservative investors made placements as this used to be an interest-earning vehicle. However, there have been changes in the rulings of the Securities and Exchange Commission that changed such financial vehicle from being interest-earning to being mark-to-market. In simple terms, bonds funds now also experience fluctuations but it is only very minimal and nothing compared with the fluctuations being experienced by stock funds. In the Philippines, bond fund is the most popular type of mutual funds since most Filipinos are very conservative investors. The best mutual funds under this classification include Prudentialife Fixed Income Fund, Cocolife Fixed Income Fund, Sun Life Prosperity GS Fund, Sun Life Prosperity Bond Fund, Philam Bond Fund, ALFM Peso Bond Fund, First Metro Save and Learn Fixed Income Fund, Philequity Peso Bond Fund, DWS Deutsche Philippine Fixed Income Fund, and Ekklesia Mutual Fund.

An investor who is conservative but wants to try an aggressive type of mutual fund may want to try the balanced fund. With the balanced fund, an investor can have the best of both worlds. Fifty percent of the funds in a balanced fund are invested in the stock market and the other half is invested in stocks. In other words, if the stock market is up, then investors of the balanced fund are expected to earn high too. At the same time, if the performance of the bonds is positive, then investors of the balanced fund are expected to earn high too. In simpler terms, the performance of the balanced fund is greatly affected by the performances of the stock market and the bond market. The best mutual funds under the balanced fund category include ALFM Growth Fund, First Metro Save and Learn Balanced Fund, Inc., Philam Fund, Inc., GSIS Mutual Fund, Inc., MFCP Kabuhayan Fund, Optima Balanced Fund, Sun Life Prosperity Balanced Fund, and First Galleon Family Fund.

It is true that the type of mutual fund that we will invest in also has to depend on the type of personality that we have. If we are aggressive, it is ideal to invest in stock funds. If we are conservative, bond funds are the best one for us. If we want to have the best of both worlds, then placing in balanced funds is highly recommended.