Posts Tagged ‘Mutual Funds’
Saving the Way to College sans Education Plans
Saving the Way to College
by: Kendrick Chua, the Wealth Warrior
First appeared in May-June 2009 of Money Sense. Was also my first paid article
Norma (not her real name), who is connected to one of the biggest educational plan providers before, can’t help but cringed when I asked her how people are reacting now towards educational plans. Her facial expression mimics the sentiments of her clients and their more subtle way of rejecting her.
Twenty years back, it was unthinkable that education plans will now be received with hostility. When educational plans were first launched, they were a much sought-after investment instrument by the public. After all, education is one of the major financial priorities of Filipino parents and the burden of a forthcoming college education cost is no laughing matter.
Tags: education plans, life insurance, Mutual Funds, stocks
Ranking of Equity Funds in both UITF and MF (as of August 19, 2009)
Ranking of Equity Funds in both UITF and MF (as of August 19, 2009)
Couple of months back, I wrote about the ING Funds rising from the ashes just like the mythical Phoenix (http://thewealthwarrior.net/?p=194). Today, it has even soared higher and faster than its contemporaries. In a bull market, being heavy weight in equities is ideal. Below is the complete list of the different equity funds and their YTD returns.
ING Bank, N.V. ING Philippine High Conviction Equity Fund |
88.20% |
| AB Capital and Investment Corp. AB Capital Equity Fund |
73.63% |
ING Bank, N.V. ING Philippine Equity Fund |
71.85% |
| Philequity Fund, Inc. |
54.10% |
| Philippine Stock Index Fund Corp. |
52.49% |
| Metropolitan Bank and Trust Company Metro Equity Fund |
48.68% |
| Banco de Oro UITF Equity Fund |
48.43% |
| Philequity PSE Index Fund Inc. |
48.16% |
| Banco de Oro BDO Peso Equity Fund |
45.76% |
| Asia United Bank-TIG AUB Equity Investment Fund |
45.67% |
| RCBC Rizal Equity Fund (vice Tiger Equity Fund) |
37.77% |
| Philam Strategic Growth Fund, Inc. |
36.92% |
| Philippine National Bank PHISIX |
35.42% |
| Sun Life Prosperity Phil. Equity Fund, Inc. |
33.89% |
| ATR KimEng Equity Opportunity Fund, Inc. |
31.43% |
| BPI Equity Fund |
30.64% |
| First Metro Save and Learn Equity Fund, Inc. |
29.41% |
| DWS Deutsche Philippine Equity Fund, Inc. |
24.50% |
| United Fund, Inc. |
13.11% |
| Allied Banking Corporation Allied Unit Performance Equities Fund |
6.86% |
Tags: Mutual Funds, uitf
ING Equity Funds: “Phoenix” Funds
ING Equity Funds: Phoenix Funds
by: Kendrick Chua (The Wealth Warrior)
According to the legend, the Phoenix is a bird that dies in flame and reborn from its ashes. You might be wondering by now what has that got to do with finance and investment when the similarity is like heaven and hell.
Last year was a very dreadful year for the financial markets world wide and our local funds were hit hard by it to say the least. The ING equity fund and high-conviction fund have been the worse performing funds across all Unit Investment Trust Funds (UITF) and Mutual Funds (MF). They both had losses of 56% and 58% respectively compared to the 48% of the index.
In other words, they are already dead. Come on the index has already suffered a lot (and so did the investors) and it doesn’t provide any comforts that the funds did a whole lot worse.
Tags: Mutual Funds, stocks
Mutual Funds Can Make You a Millionaire
Mutual Funds Can Make You a Millionaire
Investor’s Business Daily founder and chairman, Bill O’Neil, has a distinctly different outlook on Mutual Funds compared to his views on individual stocks.
Q: What do you think of Mutual Funds?
O‘Neil: Mutual Funds are the best investment medium ever produced for many individual investors. They are easy to use and widely accessible for individual sale, as well as through corporate and government retirement programs.
One reason for their popularity is their relatively low cost. By pooling the assets of many people, funds achieve economies of scale that cut their cost of investing while generating substantial long-term returns for their investors.
A diversified U. S. Stock funds, industry funds or foreign funds. You simply can’t know all you need to know about all the different types of funds.
Also, because a majority of the real growth occurs in the companies traded on the U.S. exchanges, why not concentrate on funds that invest in companies you know about t and are familiar? Funds, I believe, are better, safer and more liquid investments, in most instances, than private business ventures, l on, arts, coins, savings and loan accounts, trust deeds or real estate.
Q: Which type of fund do you prefer?
O’Neil: A stock fund can be either a value fund, investing in stocks deemed to be undervalued in price, or a growth stock fund that focuses on companies with expanding profits. A fund might also specialize in either large-capitalization stocks or smaller companies. A fund also could be smaller or large in terms of assets under management.
In any case, you should stick to proven, basic formats. Keep it simple. You don’t need the latest fad in funds, whether it is micro-cap funds, fund of funds or some new closed-end fund.
The fund you opt for doesn’t have to be the absolute hottest performer for the year. You should do well if you check out an A+ or a rated fund in Investor’s Business Daily’s Mutual Fund tables. Investor’s Business Daily’s 36-month Performance Rating grades all funds on scale from A+ (representing the top 5% of performers) to E (the laggard performers.)
You also should probably avoid the fastest-moving, most volatile fund because it will be invested in lower-quality, less-proven stocks trading with much less volume. These stocks will not be as marketable when the fund grows in size or faces bear-market declines.
Q: When should you sell a mutual fund?
O’Neil: There’s only one real secret to success when you acquire a mutual fund. It’s something not everyone understands or has the patience to implement. It’s easy: You never, ever sell a domestic, diversified growth stock mutual fund. You hold it until you die, so to speak.
Here’s why: The U. S. Market has continually grown as our population; economy and standard of living have continually increased.
This natural rate of growth actually accelerated after we were victorious in World War II. We’ve come through wars, recessions, depressions- you name it. Our system of freedom and opportunity has proven to be the most successful in the world. Invention and innovation continue to drive our unparalleled advances.
Many people, out of fear or lack of information, underestimate the d depth and strength of the U.S. system, its people and its economy. As with everything, you can expect to have some down years with your mutual fund investments. However, this is really irrelevant, because a professionally managed diversified portfolio will in time recover and rebound along with the economy.
A wisely selected fund could possibly double in value every five or six years because of the principle of compounding. Compounding involves constantly allowing greater sums of money to work for you.
If you begin with $5,000, you could have $10,000 at the end of your first five or six years. Your next five- or six- year period would see your $10,000 mutual fund portfolio shoot up by, not another $5,000 but by $10,000 and the following period could see your $20,000 swell to $40,000, and then $80,000 and so on.
The key here is the magic of compounding. That’s why I say never sell a good U.S. growth stock fund. The compounding will make you mind-boggling fortune if you simply have the sense to make your fund a permanent investment. Sit tight and stop worrying. Go out and enjoy life.
If you play out the scenario for a few more cycles, your $80,000 would be $160,000, and the $160,000 could mushroom to $320,000, and this is assuming you only y forked over an initial $5,000! You would make even more if you added money every month or every year, plus added extra to your fund during each bear market sell-off. Today, it’s possible for anyone I n America to become a millionaire by investing in Mutual Funds.
And you don’t have to sell when you turn 65 or 70. If you need income, just set up a monthly or quarterly withdrawal plan to take out 7% or 8% each year.
Q: Should you diversify your fund holdings?
O’Neil: As time goes, it’s okay to buy a second or third fund. You might want both a growth fund and a value fund or perhaps an index fund. However, you don’t need diversify among 8 or 10 funds because in most cases it will serve to water down your total return by 3% or 4% per year. Over diversifying with too many funds can be counterproductive.
Most mutual fund companies have a big fund family of 20 to 50 funds or more. Because there are so many funds options available, it’s natural, then, that asset allocation, the practice of allocating a certain percentage of your portfolio to varying types of investments or funds, has become popular.
However, I’m not a big advocate of allocation programs because, while they may provide a hint of added safety, they will almost always reduce your overall annual returns. And it might cost you more if wide diversification forces you into higher commission brackets in the case of funds with sales charges.
Also, along with allocation comes the recommended switching to more of a certain category and less of another. These switches have not improved performance over time. My guess is that you will blow another percent or two a year on all of this messing around. Why? Because historically most industry officials aren’t truly experts at forecasting market tops and bottoms, or trend shifts.
Also, I wouldn’t agonize over whether the fund’s fees are low or high, or whether its portfolio turnover rate and commissions are low high. A strong net performance record is the bottom line, regardless of fees or trading activity.
Tags: Mutual Funds
