MANILA, Philippines - The First Metro Asset Management Inc. (FAMI) is bullish in the long-term prospects of higher equity prices as the Philippine and regional economies remain strong.
FAMI is the asset management unit of the First Metro Investment Corp., a wholly owned subsidiary of the Metrobank. FAMI is the fund manager of four mutual funds.
The Metrobank Group of Companies believes that the country’s gross domestic product (GDP) in the second semester will expand by 5.5 to six percent. Robust growth will be experienced in exports, manufacturing and business process outsourcing (BPOs), private construction, mining, and of course, remittances.
“The strong Philippine economy coupled with growing optimism over the new government, is supportive of higher equity prices as it attracts more funds and improves business conditions in the country,” Hector C. de Leon, executive vice president and chief operating officer of FAMI, said.
Longer-dated fixed income securities will continue to be more attractive than shorter tenors because of the country’s better-anchored inflation record and inflationary expectations. A low interest rate environment will persist until the end of the year and probably through the first half of next year.
Domestic firms are expected to continue tapping the debt market for capital, rather than take the riskier route of going public via the initial public offer (IPO), given the low interest rate environment.
Institutional and individual investors meanwhile are looking for more investment options other than the low-yielding special deposit account (SDA). One is the mutual funds managed by reputable fund managers.
FAMI manages four mutual funds invested in the equity or stock market (Save & Learn Equity Fund), the bond or fixed income market (Save & Learn Fixed Income Fund), the money market (Save & Learn Money Market Fund), and the combination equity and fixed income (Save & Learn Balanced Fund).
As expected, the yields of the equity fund has been growing by 62 percent since its inception five years ago. Its annual average yield stood at 28 percent. And the second best performer is the balanced fund, since a portion of the fund is placed in the equity market.
The balanced funds year-to-date yields stood at 59.79 percent since its formation three years ago. Thus its annual average yield is 21.22 percent.
The fixed or bond market has recorded a year-to-date yield of 8.63 percent, or a 7.24 percent yield growth since 2005. Finally, the year-to-date yield of its one-year old money market fund stood at 1.18 percent.
A mutual fund is a pool of individual and institutional investments managed by a fund manager. Initial investments can start as low as P2,000 to P5,000, making it a popular investment option for retail and institutional investors.
So far, there are 44 mutual funds, managed by nine licensed fund or asset managers. It has a counterpart investment tool in the trust funds managed by a licensed trust department of a commercial or thrift bank. The most popular trust fund tool is the unit investment trust fund.