Personal investing in the Philippines: Opening a mutual fund account

Rather than letting money gather dust in the bank at very low interest rates, I decided to try my hand at investing in mutual funds. The average Filipino may think that investing is only for the big boys, but it’s actually pretty easy to open a mutual fund account.

Under Philippine law, any person of legal age (i.e., at least 18 years old), regardless of nationality, can invest in mutual funds. Aside from the necessary forms — which can be downloaded online — that need to be filled out, the only requirements are:

• Photocopy of one or two valid ID(s)
• Initial investment as low as PHP 1, 000

And that’s it. After doing my due diligence by reading up on the types of mutual funds and their risks, I opted to spread my investments across three different types — equity or stock, balanced, and bond — and in three different mutual fund companies (let’s not put all our eggs in one basket).

I based my choices of Philippine mutual fund companies on the following simple criteria:

• They’ve been around for a long time and posted good historical returns. As the investing mantra goes, “past performance is not a guarantee of future performance,” but at least these companies are less likely to up and disappear with your money (Aman Futures Group, anyone?).
• They offer convenient online services. In this day and age, this should already be a given, but not all local mutual fund companies have gotten with the times. The ones that have got my business.

1. Philequity Fund

My choice of equity or stock fund is Philequity Fund (PEFI), which is managed by Philequity Management (PEMI).

Pros

• Minimum initial investment is PHP 5, 000, and minimum additional investment is PHP 1, 000 only.
• Account opening procedures explained clearly on their website. Just follow the instructions to the letter, and you’re good to go. I sent my application through courier, and they called immediately upon receiving my application to confirm.
• Upon enrollment, confirmation notices and account statements sent automatically through email. No more waiting for snail mail. They sent my first notice and statement within two days of booking my intial investment.
• Good customer service. They get high points for this, because good customer service is hard to come by in the Philippines. They reply to emails promptly and satisfactorily — no canned, automated responses. It gives you some peace of mind about forking your money over to them, knowing they won’t ignore you if you have any concerns.

Cons

• High entry, exit, and management fees. PEMI has one of the highest sales loads among Philippine mutual fund companies. PEFI in particular has a maximum sales load of 3.5%.
• Additional charge for bank deposits. Most banks in the Philippines collect fees for interregional over-the-counter deposits, and Banco de Oro (BDO), PEMI’s settlement bank, is no exception. If you’re outside Metro Manila, BDO will charge a PHP 50 deposit fee for your initial investment, and for every additional investment made through over-the-counter deposit.
  Edit: PEMI also has settlement accounts with UnionBank, which doesn’t charge for over-the-counter deposits.
• No automatic online banking enrollment. Additional investments can be made online without charge through funds transfer on BDO Internet Banking, which is convenient for existing users. However, unlike some other mutual funds which are listed as billers and can be enrolled automatically, adding the settlement account of PEFI or other PEMI mutual funds requires having to print and sign a form and trotting over to a BDO branch for approval to enroll “Another Person’s Account(s)”, which takes a while.
  Edit: I was able to top up my PEFI investment online, without charge, through funds transfer from my UnionBank EON CyberAccount. No enrollment required; simply enter your transaction password. Be sure to send a copy of the funds transfer receipt and completed Investment Application Form to sales@philequity.net.

2. GSIS Mutual Fund

My choice of balanced fund is GSIS Mutual Fund (GMFI), which is managed by Philam Asset Management (PAMI). PAMI is a wholly-owned subsidiary of the insurance company Philam Life.

Pros

• Minimum initial investment is PHP 5, 000, and minimum additional investment is PHP 1, 000 only. For government employees, it is even lower at PHP 1, 000 and PHP 500, respectively.
• They accept initial and additional investments in cash at their offices. Not everyone has a checking account. In this regard, PAMI wins over PEMI, which seems to have only one office in Manila that doesn’t accept cash.
  Edit: Although PEMI’s main office in Manila doesn’t accept cash, they do accept cash investments through their authorized distributor, eBusiness Services (eBiz).
• No charge for bank deposits. PAMI’s settlement bank is Bank of the Philippine Islands (BPI), which doesn’t charge for over-the-counter deposits. Goodbye PHP 50 deposit fee!
• Automatic online banking enrollment. Additional investments can be made online, also without charge, through BPI Express Online. Unlike with PEMI mutual funds, making additional investments to GSIS Mutual Fund or other PAMI mutual funds is like paying your bills, with automatic biller enrollment. No more hauling ass to a BPI branch.

Cons

• Unclear account opening instructions on their website. Makes it seem like your only option is to fax your application. I also thought you could make the initial investment beforehand through bank deposit, but turns out it is for additional investments only.
• Long wait for online access to account information. Be prepared to wait for a while to receive your activation emails after submitting a completed Investor Access Request Form (almost a month passed before I finally received mine). Apparently PAMI has to forward online access requests to India (?!?), and they are processed there.

3. First Metro Save & Learn Fixed-Income Fund

My choice of bond fund is First Metro Save & Learn Fixed-Income Fund (SALFIF), which is managed by First Metro Asset Management (FAMI). FAMI is part of the Metrobank Group of Companies.

Pros

• Minimum initial investment is PHP 5, 000, and minimum additional investment is PHP 1, 000 only.
• Account opening procedures explained clearly on their website.
• Automatic online banking enrollment. Additional investments can be made online without charge through Metrobankdirect.

Cons

• Additional charge for bank deposits. FAMI’s settlement bank, Metrobank, also charges a PHP 50 deposit fee.
• Confirmation notices sent through email only upon request. Not automatic, unlike PEMI.
• Poor customer service. Slow to reply to emails, and sometimes do not reply at all.
  Edit: You are more likely to receive a reply if you write to this particular email address: cor@fami.com.ph.

More on FAMI: To save on courier fees, I submitted my FAMI application to a Metrobank branch instead. The bank personnel I talked to was nice, but didn’t have any idea what to do (she had to consult with a colleague from another branch). I also sent a scanned application to their email address. I didn’t hear back from them AT ALL, so after a week I finally called their office. Turns out they did receive my email and book my initial investment, but the paper application I submitted through Metrobank had yet to arrive (whaaat?). Good thing I sent a scanned application; it definitely saved me from more anxiety.

Now that I’m a bona fide holder of mutual fund shares, I can’t wait to see how the economy will turn out this year. May 2013 be a good year and not a meltdown like 2008 *knocks on wood*.