Complete Guide to Investing in Mutual Funds in the Philippines

Published: July 22, 2020 | Updated: October 28, 2020 | Posted by: Venus Zoleta | Personal Finance

Mutual Funds in the Philippines | Moneymax

Mutual funds investing is a beginner-friendly way to grow your money over time. A fund manager will help you manage your investment portfolio and make decisions on your behalf. However, is this investment path for you? To decide if it’s worth the investment, you must first understand what mutual funds in the Philippines are, how they work, and how you can earn profits from them. We’re breaking down the basics for you. Keep on reading to get a head start on mutual funds investing in the Philippines.

What are Mutual Funds and How Do They Work?

Mutual funds are professionally managed bonds, stocks, and other investment products. It is made up of a pool of money collected from various investors. The money is then used to invest in different assets. A fund manager manages mutual funds for investors. He or she allocates the fund’s assets and tries to produce capital gains or income for the mutual fund investors. If you’re an individual investor, you can access equities, bonds, and other securities via mutual funds. As a shareholder, you will get equal shares in the gains or losses of the fund.

Mutual Funds vs UITF

In the Philippines, mutual funds are similar to unit investment trust funds (UITFS). The only differences between these two investment vehicles are the companies that offer them and government agencies that regulate them. Insurance companies typically manage mutual funds, while banks handle UITFS. The Securities and Exchange Commission (SEC) regulates mutual funds companies in the Philippines. For UITFs, the regulatory body is the Bangko Sentral ng Pilipinas (BSP).

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How Can I Earn Money from Mutual Fund Investing?

Mutual Funds in the Philippines - How to Earn Money

You can earn a profit from mutual funds in the Philippines in three ways—dividends, capital gains, and increased net asset value (NAV).

  • Dividends. A mutual fund can earn profits from dividends on stock or interest in assets. The mutual fund company will then pay you most of the income, minus the expenses incurred by the company. You can receive payment via check or choose to reinvest the profit to purchase more shares.
  • Capital Gains. When a fund sells securities that have increased in value, the fund will earn a capital gain. At the end of the year, the mutual funds company will then distribute these gains, minus any capital losses, to their investors.
  • Increased Net Asset Value. Net asset value or NAV represents a fund’s per unit market value[1]. If the market value of the fund’s portfolio rises, then the value of the fund and its shares also increase. The higher the NAV, the higher your investment’s value is.

Take note that your potential earnings are subject to fees and other charges as stated in your chosen mutual funds company’s terms and conditions.

Types of Mutual Funds in the Philippines

Mutual Funds in the Philippines - Types of Mutual Funds

You can choose to invest in one or a combination of mutual fund types. Each type caters to various investment timeframes, financial goals, risk appetite, and instruments where the pooled funds are invested.

Bond Funds

Also known as a debt fund, you use this type of mutual fund for beginners to invest in bonds and other debt instruments to generate monthly income for investors. In general, bond funds only require a minimum investment.

This type of mutual fund is ideal for investors with low to moderate risk appetite who want to protect their savings against inflation. Bond funds may also offer higher profits compared to time deposits and money market investments.

Equity Funds

These are typically used to invest in stocks. Equity funds invest in the shares of different companies to make a profit. Some equity funds may even target specific sectors for stock investment.

This type of mutual fund investment is perfect for investors with a higher level of risk appetite and who want a longer timeframe for investment. If you are a seasoned investor with experience in the Philippine Stock Market (PSE), equity funds may be ideal for you.

Read more: How to Pick Stocks in PSE: Helpful Tips for Beginners

Money market funds

This type of mutual fund only invests in high-quality, short-term instruments like cash and cash-equivalent securities. In general, money market funds invest in certificates of deposits (CDs), treasuries, bankers’ acceptances, and repurchase agreements.

Are you a mutual funds beginner with a lower risk appetite? This mutual fund might be right for you. Because money market funds carry lower risks, the returns can be quite small as well.

Balanced funds

It is a mix of bonds, stocks, and other securities. Balanced funds are also known as hybrid funds because it aims to make a profit by investing in a combination of various mutual fund types. Typically, balanced funds are composed of 60% stocks and 40% bonds.

Typically, balanced funds are ideal for investors with low to moderate appetite for risk who want to earn a bit more than what bond funds offer. The investment timeframe for this type of mutual fund is three to five years.

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Pros and Cons of Investing in Mutual Funds in the Philippines

Mutual funds are perfect for newbie investors, especially if you want to start investing but can’t actively manage your own money. However, it also poses some disadvantages that you should be aware of before shelling out your hard-earned cash.

Mutual Funds Advantages


You can easily invest in mutual funds in the Philippines with the help of the internet. Whatever your financial goal may be, there is a mutual fund that fits your needs. You also don’t have to be actively involved in the investment. Once you find a mutual funds company that you trust, you will have a relatively small part to play. The money manager will do all the leg work.

Minimum investment required

In the Philippines, mutual funds only require at least PHP 5,000 as your initial investment, while succeeding investments start at PHP 1,000. This makes mutual funds investing more affordable and accessible for newbies who don’t have much money to shell out.

Professional money management

As an investor, you will benefit from the expertise and full-time service of a professional fund manager. He or she makes investment strategies and decisions on your behalf.

High liquidity

Because mutual funds are a highly liquid investment, you can buy or sell your shares immediately, usually within a business day.

Good diversification

Your money is invested in a variety of assets, helping minimize the risk of losing your investments.


Mutual fund companies in the Philippines are regulated by the Security Exchange Commission (SEC). They also must comply with the Investment Company Act (Republic Act 2629). Financial institutions that offer mutual funds cannot invest in certain assets or get involved in certain transactions. All these things protect you against illegal and unfair investment practices.

Mutual Funds Disadvantages

Mutual Funds in the Philippines - Mutual Funds Disadvantages

Fees involved

Because someone else is managing the fund for you, you have to incur some fees and charges no matter how the fund performs. You may have to pay an annual fee for fund management, usually based on a small percentage of your shares’ total value.

No control over the portfolio

When you invest in mutual funds in the Philippines, you pass on all control to a professional fund manager who makes all investment decisions for you. You can’t step in to make strategies for the fund.

Potential risks

For conservative investors, mutual funds may not be the right fit. Low-risk mutual fund investments only have minimum returns. Mutual funds also do not come with guaranteed returns.

List of Mutual Funds Companies in the Philippines

Here are some of the companies offering mutual funds in the country:

ALFM Mutual Fundsequity, bonds, money market
ATRAMequity, bonds, money market
Cocolife Asset Management Company, Inc.bonds, equity
First Metro Asset Management, Inc.balanced, equity, bonds, money market
Grepalife Asset Management Corporationbonds, balanced
MAA Mutualife Philippines, Incbonds
Philam Asset Management, Inc.bonds, equity, balanced
Philequity Management, Inc.equity, bonds
Prudentialife Optima Fundsequity, bonds
Sun Life Mutual Fundsmoney market, balanced, equity

For the complete list of mutual funds companies, visit the PIFA website[2].

How to Invest in Mutual Funds in the Philippines

Mutual Funds in the Philippines - How to Invest in Mutual Funds

Here are some of the steps in mutual funds investment:

1. Evaluate your goals

Before deciding to invest in mutual funds, analyze what your financial goals are. Ask yourself why you want to start mutual fund investing. What is your risk appetite? How much money are you willing to invest? This will help you evaluate whether mutual funds are the best investment vehicle for you or not.

2. Choose the right company that fits your needs

Once you’re sure that mutual funds are the way to go, research about mutual fund companies in the Philippines. Make sure these companies are regulated by the SEC. Several companies tied to banks and insurance firms can help you get started in mutual funds. You can visit them in person to inquire about investment opportunities or explore their websites and compare their offerings against each other.

You can also visit the Philippine Investment Funds Association (PIFA) website to find the best company to invest in, based on their NAVPS performance. NAVPS stands for Net Asset Value Per Share that represents a mutual fund’s price per share.

3. Talk to your agent

When you’ve finally chosen the best company that will manage your investment, an agent will be assigned to answer your questions. You can list down all your questions before meeting with the agent so that you won’t forget them. The agent will also help you find the best type of mutual fund for your needs. He or she will be there to guide you from investing to monitoring your investment.

4. Pick the best type of mutual fund for you

The next step is choosing the kind of mutual fund you would like to invest in. Consider your financial goal, risk appetite, and preferred investment timeframe when picking one. Several different accounts are available locally and carry various kinds of risks and returns.

5. Submit the requirements

Answer the Investor Profile Questionnaire, which will help determine what kind of investor you are and your risk tolerance. You will need to fill up a personal information sheet and submit valid IDs. You also have to fill up an Order Ticket to determine how many shares you plan to purchase.

6. Track your investment

Once you’re all set, make sure to monitor your investment. Talk to your fund manager to get updates about the performance of your share. Remember that payments for mutual funds should only be done at the company’s office, or at a partnered bank to avoid any issues.

Final Thoughts

Mutual funds are a great starting point if you have little to no investment experience. However, before delving into this investment path, evaluate your needs and goals first. Determine what you’re investing for and your risk tolerance. Make sure to research different companies offering mutual funds in the Philippines and compare them against each other. Choose the type of mutual fund that is right for you. Lastly, always monitor your investment.

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