How To Invest In Mutual Funds Philippines 2024

If you’ve come across the term mutual funds in the Philippines and you’re wondering what are mutual funds, this simple mutual funds beginner guide will answer all your questions. In addition, we will be covering frequently asked questions about mutual funds such as the following…

What is the minimum investment in mutual funds? What are the advantages of mutual funds in the Philippines?, what are the best options for mutual funds, and ultimately be asking if you should or should not invest in mutual funds in the Philippines.

Technical jargon and financial terms have been altered to make this article super user-friendly.

Table of Contents

What Are Mutual Funds Philippines?

Mutual funds in the Philippines are types of financial products that a professional funds manager manages. An investor’s funds are pooled together with other investors’ funds to invest in different asset classes such as fixed-income securities, equities, etc.

So instead of investing in several different companies on the Philippine Stock Exchange, the mutual fund allows you to invest and receive rewards such as dividend payments (bonus payments for being a shareholder). At the same time, the mutual funds are being managed by a financial professional (win-win!).

The mutual fund’s manager (sometimes called by different titles) has the responsibility of managing the fund, and thus it is a source of passive income. Because of this management, the mutual fund company will receive a management fee for managing your fund (more on this later).

There are different types of mutual funds in the Philippines, ranging from short-term to long-term and low-risk to high-risk funds.

In other words, there are different types of mutual funds in the Philippines for every kind of investor. Some experts suggest that you may benefit from investing in a higher risk and more long-term investment if you are younger. On the other hand, if you are slightly older, then it may be more appropriate to invest in a short-term investment that is more stable.

As always, this is general information and not to be taken as personal financial advice. It is recommended to speak to an independent financial advisor before investing in mutual funds; every kind of mutual fund in the Philippines carries some risk element.

Minimum Investment Mutual Funds In The Philippines

Compared to many investments in the Philippines, mutual funds have a low financial threshold. Therefore, the minimum investment in mutual funds in the Philippines can differ. Still, in most cases, the minimum investment that will be required is 5,000 Pesos.

Another common question is, what is the minimum top-up investment of mutual funds in the Philippines? Again this figure can slightly range, but in the majority of cases, the minimum top-up investment for mutual funds is 1,000 Pesos.

How To Earn In Mutual Funds Philippines

There are two primary ways to earn money from a mutual fund in the Philippines. The first way is through dividend payments. Secondly, you can earn money from the increased net asset value (NAVPS).

1. Dividends. Most straightforwardly, Dividends are a bonus payment given from a company to a shareholder as a reward for trusting and investing in their company. Dividends are typically paid if a company has been profitable, but dividends are not guaranteed. Instead, the dividend payment will be paid to your mutual fund company.

From there, your mutual fund company will take away any fees (this is why it’s essential to check the small print before investing in mutual funds) and reimburse you for the profits. From here, you can then decide to keep your dividend payments and cash out or reinvest.

2. NAVPS. NAVPS stands for the net asset value per share and what this essentially means is the fund’s unit market value. Therefore if your mutual fund rises in its overall net asset value, the fund itself will increase. If a fund has a high net asset value, then the higher the value will be.

You can then make the financial decision whether you will withdraw at this time or continue your investment.

As mentioned, there may be different fees involved, and the time scale plays a big part. For instance, some mutual funds have a minimum withdrawal time. This means if you invest, and want to withdraw your fund within a few months, then there may be an additional fee. Therefore it’s always recommended to speak to your mutual fund’s company in the Philippines before investing.

How can you cheque the NAVPS for the top mutual funds in the Philippines? For this, you can head over to the Philippines Investment Fund Association. From there, you can see the different types of funds, including how the mutual funds in the Philippines have been performing over the last few years.

Advantages Of Mutual Funds In The Philippines

When looking at a beginner’s guide to mutual funds in the Philippines, you may have another common question: What are the advantages of mutual funds in the Philippines, and how are they different from other investment products?

Similar to every type of investment, there are pros and cons to mutual funds in the Philippines. We will later be discussing some disadvantages of mutual funds, such as the fees, etc., but first, here are the advantages of mutual funds Philippines.

Mutual funds in the Philippines mostly have a minimum investment of only 5000 Pesos
Many mutual funds also have a minimum top-up amount of only 1000 Pesos
Funds are managed by financial professionals and, in some cases, a small team

Historical records and data of mutual funds in the Philippines are available
Mutual funds can sometimes be a high return on investment
Investing in mutual funds in the Philippines is a straightforward process

There are many different types of mutual funds on the marketplace
You can withdraw your investment easily compared to other investment products
You spread your risk by having a diversified portfolio

Mutual funds in the Philippines are a source of passive income
Financial returns can be reinvested to grow your investment through compounding

As you can see, there are many different types of mutual fund advantages for the Philippines. Depending on your goal and risk portfolio, some added benefits will be more applicable to your financial situation.

Additionally, aside from looking at the advantages of mutual funds in the Philippines, it’s also essential to look at any disadvantages. In my personal experience, I believe the advantages of mutual funds in the Philippines far outweigh the disadvantages, but mutual funds are not suitable for every kind of investor.

Suppose you are interested in the advantages of mutual funds in the Philippines due to the passive income…. In that case, you may be interested in looking at some of the best passive incomes in the Philippines.

Are Mutual Funds A Good Investment In The Philippines

In all honesty, this is a question that many websites and independent financial experts do not like to answer because there are so many different elements that need to be taken into account to answer this correctly. Still, nevertheless after looking at the advantages of mutual funds in the Philippines, it’s crucial we also answer this question.

Mutual funds are a popular financial investment across the Philippines as they include many financial advantages. However, whether a mutual fund investment is a good idea for an investor in the Philippines depends upon their risk level, financial goal, and personal situation.

For instance, cryptocurrency is well known to be a high-risk investment; however, cryptocurrency can be a very profitable stream of income for short-term traders or day traders due to its volatility. Historical records and statistics also support this.

Mutual funds are unlikely to bring high returns in such a short period compared to cryptocurrencies. However, in my opinion, mutual funds in the Philippines are suitable investments if an investor is looking to invest long term and utilize the power of compounding.

In many cases, long-term mutual funds in the Philippines are high risk, so an investor’s risk level comes into play.

In summary, if an investor is investing in mutual funds that are long-term and high-risk, then investing in mutual funds in the Philippines will likely be beneficial as long-term investing is better for a high-risk product. Why is this? Because the mutual fund has more opportunity in terms of probability to balance itself out and become profitable.

Fees Mutual Funds Philippines

As we established when looking at what are mutual funds in the Philippines, mutual funds can be purchased from a private company such as COL Financial.

This is important because when you are looking at fees for mutual funds in the Philippines, the amount will differ depending on the company you are choosing.

To make this easier, we will give some generally included fees for mutual funds in the Philippines and go through a real-life example using a popular platform called COL Financial.

Topping up fees (a small fee similar to the initial fee that is added to additional top-ups of your mutual fund)
Front end fee (this is an investment fee charged at the beginning of purchasing your mutual fund often this is calculated on a percentage basis, but many companies are now choosing to remove this fee to courage new investors)
Management fee (as mentioned previously, the company will receive a fee, often called a management fee. This is taken from the pooled investment meaning that you do not need to pay for this directly as it is already withdrawn)

Early exit fee. (if you decide to invest in a mutual fund and the very next day change your mind, then an early exit fee may be applied before you can withdraw. This is often a few percent, but it can be a considerable amount if you are investing many Pesos)
Other fees. (depending on the company, there may also be additional fees such as a brokers commission, taxation directors fees, etc. it’s recommended speaking to the company directly to find a complete list of fees)

So now that we have some of the most common types of fees involved in mutual funds in the Philippines, how does this apply to a real-life situation?

For example, let’s take a look at Col Financial, one of the Philippines’ leading mutual fund providers. If we were to invest, what fees would be incurred? Of course, the first fee would be the front-end fee. This is sometimes referred to as a sales load, which is ultimately a sales commission on the original investment. Therefore, the higher your investment, the higher the front-end fee will be.

Update* COL Financial – now do not charge front-end fees.

Next, we can see that COL Financial also has an early exit fee on some of its mutual funds. Some of the funds do not have a holding period, which means you will not be charged an early exit fee if you decide to withdraw. Some of their funds, on the other hand, have a minimum holding period of 180 days. The fee amount ranges but averages out at around 1% for their early exit fee.

How To Invest In Mutual Funds Philippines

So now that we have established the advantages of mutual funds in the Philippines, the associated fees, and a few of the essential facts, the next important question is how to invest in mutual funds in the Philippines for beginners?

If you are a beginner, investing in mutual funds in the Philippines is a straightforward process. First, you will need to meet the companies requirements to open an account with a mutual fund investment company. Once this has been met, mutual funds can be invested online through the mutual fund companies’ website or platform.

Thus to invest in mutual funds in the Philippines, the first stage is to open up an account with a mutual fund provider. Once this has been completed, you will be required to deposit your funds and follow clear instructions to invest with your chosen platform.

After you have invested, you will monitor your portfolio through the mutual fund companies platform or monitor the funds directly on the Philippine Stock Exchange.

There are many different types of mutual fund companies in the Philippines. Personally, I invest in using COL Financial as everything can be done online effortlessly. They also have a great online academy where they go through mutual funds in detail, covering a vast range of questions and topics.

List Of Mutual Funds In The Philippines

The PIFA (Philippines investment fund Association) has a full list of mutual funds in the Philippines that is regularly updated.

Besides including a full list of mutual funds in the Philippines, they also list the 1, 3, and 5-year returns and the NAV history. You will find out more about a mutual fund in the Philippines by clicking the hyperlink on the fund’s name.

Alternatively, many top mutual fund companies in the Philippines also run an academy and support new investors when looking to invest.

How Long Do Mutual Funds Last In The Philippines

Traditionally mutual funds in the Philippines do not have an official maturity date, and it is unlikely that this will change in the foreseeable future. Additionally, some available mutual funds have been around for over 40+ years. So naturally, many mutual funds snowball into a much larger mutual fund, increasing its overall maturity life.

In some cases (which are often financially related), funds become unprofitable, and thus, they may be adjusted or stopped.

UITF And Mutual Funds Difference Philippines

UITFs and mutual funds in the Philippines are very similar but hold differences which means one investment product may be more suitable than the other depending on the investor. UITFs are bank investment products. Mutual funds are investment products sold by private or public companies. The fees and investment returns differ depending on the company and the type of investment.

Both investments have their advantages and disadvantages. For instance, UITFs can be invested effortlessly with most mainstream banks such as BDO, Security Bank, Metro Bank, and others.

By purchasing mutual funds, you are a stockholder, but with UITFs, you are a unitholder. Both investment products are overseen by different financial authorities in the Philippines but share many common similarities.

Extra Information On Mutual Funds In The Philippines

The great thing is that in the Philippines, there is a wealth of knowledge relating to mutual funds. If you are looking for a beginner’s guide on mutual funds, this article will hopefully have answered all the questions you have; however, here is a list of extra resources that may benefit you in your financial investment.

As always, it’s essential to seek independent financial advice when looking at how mutual funds make money in the Philippines, the fees of mutual funds, and any other questions to gain the best knowledge to make the best decision.

COL Fund Source Guide

PIFA – Mutual Fund Guide Philippines

SEC Mutual Fund Distributor

SunLife Mutual Funds Basic

COL Mutual Fund Video

Investopedia – Mutual Fund Definition

I wish you success on how to invest in mutual funds in the Philippines.