Sun Life launches dollar balanced fund

MANILA, Philippines – The Sun Life Asset Management Co. Inc. (SLAMC) has re-launched its Sun Life Prosperity Dollar Abundance Fund (SLP DAF) from a dollar-denominated fixed income or bond fund to a balanced fund as more and more domestic mutual funds increase their focus on the foreign-currency funds.

The net asset of the SLP DAF stood at $17.2 million (approximately P846 million) yesterday. It is targeted to grow to $30 million or roughly P1.5 billion end 2009.

“The value of dollar savings in the Philippines reportedly amounts to some $20 billion, and it is fair to say that we want a piece of that,” Ben Thomas P. Pañares, chief operating officer of SLAMC said.

Total value of all foreign-currency denominated mutual funds managed by various fund managers as of April 2009 was P10.2 billion. Total value of all assets under management (AUM) within the mutual fund industry stood at P61.8 billion end April.

Presently, six fund managers operate 10 foreign currency-denominated mutual funds. Of the 10 funds, two are euro-denominated funds and the rest in US dollars.

All foreign currency-denominated funds are bond funds except SLF DAF.

Fixed income or bond funds are low-risk, lower-return investments while balanced funds are a mix of bond funds and equity funds (high returns, high risk investments).

Foreign-currency mutual funds, managed by domestic asset management firms like SLAMC, are invested mostly in dollar-denominated ROPs.

The SLF DAF is the first local foreign currency mutual fund that is a balanced fund. That means at any given time, 60 percent of the fund is invested in dollar-denominated bond funds and 40 percent in dollar-denominated equity funds.

“The US dollar is expected ultimately to perform better than the peso,” Pañares said.

All forecasts point to an exchange rate of between P51 to P53 versus the dollar by yearend. Historically, the peso has fallen to a low P56 to the dollar.

Pañares added that the SLF DAF is likewise an option for local investors to diversify their dollar-denominated portfolios from ROPs to dollar-denominated investments from foreign mutual funds.

Fund managers revealed that majority of the investors of foreign currency-denominated funds are corporates. They likewise admitted that they are targeting the high networth individuals that withdrew their investments overseas, and are looking for opportunities domestically.

The SLF DAF will be invested in overseas mutual funds that are rated five-star by Morningstar, a Chicago-based research firm.

SLAMC is ranked third largest fund manager in the country’s mutual fund industry. Its AUMs stood at P13.7 billion end May this year. – TPT