Benchmarking: Equity Mutual Funds and UITF

(source: Bloomberg)

When you are given a dozen eggs and inspect them closely, you will eventually see they are not of the same size (and sometimes shape) even though they came from the same poultry farm.

If you need a more human example: when you see a set of siblings, you will realize they are different from each other even though they came from the same mother and father.

Same with equity mutual funds and equity UITF, even though they are invested in the same stock market (same parent so to speak), the result of each fund differs from the others. You may compare them one by one... but you can also use just one "ruler" to measure all of them -- the Philippine Stock Exchange Index or PSEi.

Graphs after the jump.

Double your money in a mutual fund

"You could double your money by investing P5,000 a month for five years in mutual fund."

Sounds like a scam or hyped-selling? For some, it may.

But this is a real investment in the Save and Learn Equity Fund (SALEF) of First Metro Asset Management, Inc.

In mutual funds, there are no guaranteed returns. But historical figures from 2008 to 2012 suggest you could actually double your money, not just by lump-sum investing, but also by peso cost averaging.

(Note: lump-sum investing is not advisable for a fund that invests in volatile markets like equity funds. Please understand the risk and your risk appetite before investing.)

If you redeemed all your shares today, you would have a whooping 102% return of investment!

How? Read on.

Being an IMG Associate

Somebody asked me about being an Associate of the International Marketing Group or IMG. He specifically asked whether he can do it in part-time capacity.

For the uninitiated, IMG is a brokerage firm with primary goal of educating Filipinos about financial literacy. Its head office is in Makati but has several satellite offices/sub-group in major Philippine cities and in other countries. Mind you, it is too big a network to be a scam. And there is no promise of exaggerated returns. You have to do some thing to be compensated.

Anyway, part of my answer to the question is after the jump.

Why piso matters?

I currently have accounts in stocks and various mutual funds. And last January 2, the first banking day of 2013, I just started a Unit Investment Trust Fund (UITF) account with BPI.

That opening statements may send an impression that I have big funds. No. What I am doing is just preparing an allocation for certain goals. As of now, there are no specific goal for each fund.

Just one general goal: capital growth.

This quest for capital growth started in the first quarter of 2010 when I opened a mutual fund account with PhilEquity Fund, Inc.

But my interest in personal finance (I didn't know then that it was called as such) started when I was in second year college.

I applied and was accepted for a part-time job at one of the libraries in UP Diliman. It was my first experience in earning money from my own sweat (literal sweat as we had to move books from shelf to shelf).

It was also the start of my own "budgeting" exercise on my limited P2,000-monthly allowance and my P2,500-monthly income from that part-time stint.

I jotted down every cash inflow and outflow in a tiny notebook that looked like this:

(image after the jump.)