Investing in Mutual Funds

What is a Mutual Fund?

A Mutual Fund is an investment company that pools the funds of many individual and institutional investors to form a massive asset base.   The assets are then entrusted to a full time professional fund manager who develops and maintains a diversified portfolio of security investments.  People who buy shares of a mutual fund are its owners or shareholders.  Their purchases provide the money for a mutual fund to buy securities such as stocks and bonds.  A mutual fund can make money from its securities investments in two ways: a security can pay dividends and interest to the fund, or a security  can rise in value.  The fund passes any dividends, interest or profits on the sale of its portfolio securities, less fund expenses, to shareholders in the form of distributions. <Definition from: Philippine Investment Funds Association (Formerly ICAP)>

Mutual Fund Cycle:

( Video) What is a Mutual Fund?

Financial Planning Rules on Where to Invest Your Money:

Rule #1 - Do not invest in something you do not understand.
Rule #2 - No Risk, No Gain. (Returns must beat inflation).
Rule #3 - Match the investment product with your time horizon (and goals).
Rule #4 - Do not put all your eggs in one basket.

(GMA News Video) Financial Planning author Francisco Colayco on Mutual Funds investing:

Pesos and Sense Explaining Mutual Funds:
(Pesos and Sense is a GMA News TV Program which seeks to bring Financial Literacy to Filipinos).

4 Basic Types of Mutual Funds:

I.  Stock (or Equity) Fund  
  ->  Major portion of the fund is invested in stocks of corporations. 

II. Bond Fund  
  ->  Major portion of the fund is invested in government and/or corporate bond securities.

III. Balanced Fund  
  ->  Investments are in stocks and bonds (Ideally a 50/50 mix).  

IV. Money Market Fund  
  ->  Major portion of the fund is invested in short-term money market instruments.

Advantages in Investing in Mutual Funds:

Professional Management
-> Investors of the mutual fund utilizes the services of a full time investment fund manager whose expertise is to analyze the various investment products available in the market and to select those which would yield the best possible returns to the fund and its shareholders. The fund manager is also supported by research teams focused on acquiring the best opportunities in the market.

Low Capital Requirement
-> Investors can start investing in Philippine mutual funds for as low as Php 5,000 and minimum additional investments of Php 1,000.

-> The pooled fund provides the mutual fund investor with instant diversification over a wide array of securities since the fund is usually invested in different financial instruments so as to avoid the concentrated risks associated with  investing in a single financial security.

-> Liquidity is the ability to easily convert investments into cash. Mutual fund investments are very liquid because the mutual fund company stands ready to buy back the shares of the mutual fund to be redeemed by the investor based on the current NAVPS. Philippine laws governing Mutual Funds also stipulates that the redemption proceeds must be given within seven (7) banking days from the date of the redemption request. Thus mutual fund investments are considered to be very liquid investments.

-> The mutual fund industry is highly regulated by the Securities and Exchange Commission (SEC) under the Investment Company Act and its implementing rules. The mutual fund company is required to submit regular reports to the SEC as well as to the shareholders. Moreover, the fund's assets are held by a custodian bank separate from the management company.

Potential Higher Returns
-> Investments in a mutual fund can give the investor a potentially higher return compared to a regular time deposit.

Tax Free
-> Earnings from Mutual Fund investments are excluded from items considered as taxable income. This is based on a provision of the Comprehensive Tax Reform Package (CTRP) of 1998.


For more information about Philippine Mutual Fund companies, please refer to:

Philippine Investment Funds Association (PIFA) - Formerly known as Investment Company Association of the Philippines (ICAP)

Philam Asset Management Mutual Funds Information:
Note: Right click on link to open in new window.
PAMI Fund Name
Fund Details
(link to PAMI website)
Fund Type
Historical Performance Chart
(link to
Philam Bond Fund, Inc.
Philam Dollar Bond Fund, Inc.
Philam Managed Income Fund, Inc.
Money Market
Philam Fund, Inc.
GSIS Mutual Fund, Inc.
Philam Strategic Growth Fund, Inc.
PAMI Global Bond Fund, Inc.
NCM Mutual Fund of the Phils., Inc.

(Not Available at this time)
PAMI Asia Balanced Fund, Inc.

(Not Available at this time)

* Note: NAVPS = Net Asset Value Per Share