How to Invest in a Philippine Mutual Fund

Philippine mutual funds can be a good way to diversity your overall portfolio, but you should carefully consider the pros and cons of investing in an internationally-managed fund.

Investing in a Philippine mutual fund is much like investing in a U.S. mutual fund, but it involves special considerations. For starters, information is much less readily available regarding Philippine funds, even in the Philippines, and various laws and regulations, such as the Security Exchange Act of 1934, do not apply to international securities. If you choose to invest in a Philippine fund, you should consider the use of a financial adviser, particularly one that specializes in overseas investing.

Instructions

1. Get a listing of available Philippine mutual funds. You can start with your financial adviser, but most U.S.-based advisers do not have more than a passing knowledge of Philippine mutual funds. Consult authoritative, independent sources, such as the Investment Company Association of the Philippines (ICAP), to find reputable funds and fund companies. ICAP provides basic information on a number of Philippine funds, and provides links to the fund websites.

2. Assess your own investment objectives and risk tolerance. Before you can invest in any fund, whether U.S.- or Philippine-based, you must determine your own financial goals. At the most basic level, if you are looking for growth, you will want to own stock-oriented funds, while if you seek income, you should lean towards bond funds. In addition, before you make any purchases you should objectively ascertain the amount of risk you can handle in the valuation of your investment. If you can't sleep at night if your fund trades down 1 percent, then you should avoid stock funds. As a general guideline, if you are very risk-averse, you might want to overlook Philippine funds in general, and stick with the more transparent and regulated U.S.-based funds.

3. Analyze the performance and objectives of the Philippine funds you find. Once you have a handle on the type of fund you want to own, filter through the list of Philippine funds and sort them based on how closely they match your own needs. Check the performance history of the funds, and see how they performed in good and bad markets.

4. Invest prudently. Diversify your account, even if you find a fund that you feel is a perfect match for your goals and risk tolerance. Remember that internationally-run funds do not necessarily have to follow U.S. standards of due diligence and accounting practices, and that any fund you purchase should merely be part of your overall investment portfolio.

References

• fitzvillafuerte: Philippine Mutual Fund Companies to Invest In
• Investment Company Associatio of the Philippines: Investment Company Association of the Philippines