Why is mutual fund an ideal investment?

8/28/2015 Randomly Candid 0 Comments

THINKING of growing your money? Try investing it in mutual funds.
(Photo from www.openworldmoney.com)
WHEN talking about investments, people usually think of starting a business, buying a property or depositing money in the bank. But there is another kind of investment which promises higher yield.

This investment is the mutual funds, an investment vehicle made up of a pool of funds to be professionally managed by fund managers. The funds collected are invested in securities such as stocks, bonds, money market instruments and similar assets which also give higher returns.

Sun Life Asset Management Co., Inc. (SLAMCI) president Valerie Pama said the perspective of Filipinos on investment is to put their money in the bank. However, considering bank deposit rates in the present, a savings account is not a good investment as it does not protect investors from inflation.

“People regarded stock market as gambling because they do not understand what they are investing. In Sun Life, we have expert fund managers who study the different stocks and bonds in the market. They evaluate these investments and invest the money you have put in for you,” she said.

Pama added that a mutual fund is ideal because investors can start for as low as P5,000. Unlike other financial instruments that promise specific returns depending on the amount of investment, mutual funds offer equal yield regardless of the amount of investment, making it as a more democratic venture.

She also stressed that SLAMCI is rolling out financial literacy initiatives for the investors to become more comfortable in demystifying investments.

“The investors are usually get blinded when they are offered of high returns without understanding what the underlying instrument is,” she explained.


There are around 220,000 mutual fund accounts in the country today which is very low when equated to the 100 million population, said Pama.

Despite its low national figures, the industry is now starting to penetrate the Ilonggo market as investors here are compelled to look for other means of making money aside from deposits.

Latest data from the Philippine Statistics Authority reveal that Financial Intermediation in Western Visayas slumped from 15.2 percent in 2013 to 8.4 percent in 2014.

Financial expert Michael Manuel said the decrease in the region’s Financial Intermediation does not only mean that bank deposits have gone low as the movement of the subsector might also get affected when other sectors go up.

Data from the Philippine Deposit Insurance Corp. show that in 2013, Iloilo City ranked third among the top cities outside National Capital Region with 60,107,133,000 total bank deposits by the end of 2012. Cebu City ranked first with P176,714,664,000, followed by Davao City with P89,833,667,000.

Manuel, who is also the Chief Business Development officer of Sun Life Financial-Philippines noted that Ilonggo investors are now starting to invest in other financial instruments.

SLMCI’s growth in Iloilo posted an Asset under Management of P736 million, making it as one of the biggest provincial markets of SLAMCI aside from Davao and Cebu.


The Department of Finance (DOF) has been rolling various financial literacy efforts to educate the public on the value of investments.

DOF undersecretary Gil Beltran said the Bangko Sentral ng Pilipinas has been going around the country to educate people on the merits of investing on financial instruments.

“What we want is longer term money which is usually invested in mutual funds and equities,” he noted.

He added that investing in the stock market and investment companies, among others are other ways of growing one’s money as it offer better returns. (As published in Panay News

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