How much can you earn from Philippine mutual funds?

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Everyone who is about to invest always would want to know how much they could expect to earn in return for entrusting their money.

Whether it’s investing in real estate, business or investment fund, it’s the question that is first and foremost in our minds.

In this article, I’m going to discuss just exactly how much you can possibly earn from mutual funds that are offered in the Philippines.

If you haven’t already, please consider checking these articles for brief overview.

Mutual fund earnings

The earnings from mutual funds depend on so many factors.

If you’ve read the articles above, you would understand that your potential gain are subject to the following:

  • Fees and charges
  • Non-guaranteed returns

The fees and charges obviously negatively impact your investment. The higher they are, the lower would be what you could possibly receive.

In this article, I’m going to show the effect of 1.) sales load, which is taken off every time that you put money in, 2.) the management fee that goes to pay the operation and management of the fund, and 3.) the exit fee. If you’re interested, you may read how you can avoid sales load.

And lastly, earnings are also not guaranteed. They’re not like savings account, time deposit, or LTNCD (long term negotiable certificate of deposit) where interest is fixed and predictable.

In short, there’s no way to tell how much return on investment (ROI) you’re going to get. This is because gains (or in some cases losses) usually depend on the kind of mutual fund that you get.

The list below is roughly arranged from high to low returns, which also reflects their risks. The higher the return, the higher the risk.

RiskReturn
Index fundsHighHigh
Equities fundsHighHigh
Balanced fundsModerateModerate
Bond fundsConservativeModest
Money market fundsConservativeModest

The effect of mutual fund sales load on earnings

If you want to know how much can earn in mutual funds, the first thing that you need to be concerned about is the sales load.

Almost all mutual funds charge sales load. It is a fee that you either pay when you put money in or redeem your investment.

When it is paid upon deposit, it is called front-end fee. If it is paid when you want to get your money back, then it is called back-end fee. This can range between 1% to 5.6%.

For a more complete discussion, read this list of fees and how to avoid sales load.

Below, you see a sample comparison between a fund that charges no sales load and one that charges 1%, 3% or 5% sales load. The table has the following assumptions:

  • Compound interest of 10% yearly.
  • Initial ₱10,000 and monthly ₱1,000 investment.
  • Time horizon is 30 years.
YearDepositZero fee1%3%5%
122,00023,67023,43422,96022,487
234,00038,76738,38037,60436,829
346,00055,44054,88653,77752,668
458,00073,85373,11471,63770,160
570,00094,18793,24691,36289,478
10130,000232,489230,165225,515220,865
15190,000459,697455,100445,906436,712
20250,000832,972824,642807,983791,323
25310,0001,446,2371,431,7751,402,8501,373,926
30370,0002,453,8192,429,2812,380,2052,331,128

As you can see, the higher the fee the lower that you get in the end.

The effect of management fee on mutual fund earnings

Another fee that needs to be considered is the management fee.

You don’t have to pay this fee out of pocket the same way as the sales load. Instead, this is reflected on the net asset value per share and it generally a percentage of the entire worth of the fund.

See below the list of management fees. You may observe that it ranges from 0.25% to as high as 3%.

NameTypeManagement fee
ATRAM Dynamic Allocation Fund, Inc.Balanced1.750%
ATRAM Philippine Balanced Fund, Inc.Balanced1.750%
Bahay Pari Solidaritas Fund, Inc.Balanced2.000%
Cocolife Dollar Fund Builder, Inc.Balanced?
First Metro Save and Learn Balanced Fund Inc.Balanced1.875%
Grepalife Balanced Fund CorporationBalanced1.825%
NCM Mutual Fund of the Phils., Inc.Balanced1.800%
PAMI Asia Balanced Fund, Inc.Balanced2.000%
PAMI Horizon Fund, Inc.Balanced1.800%
Philam Fund, Inc.Balanced2.000%
Sun Life of Canada Prosperity Balanced Fund, Inc.Balanced2.000%
Sun Life Prosperity Achiever Fund 2028, Inc.Balancedundefined
Sun Life Prosperity Achiever Fund 2038, Inc.Balancedundefined
Sun Life Prosperity Achiever Fund 2048, Inc.Balancedundefined
Sun Life Prosperity Dollar Advantage Fund, Inc.Balanced1.500%
Sun Life Prosperity Dollar Wellspring Fund, Inc.Balanced1.500%
Sun Life Prosperity Dynamic Fund, Inc.Balanced2.000%
ALFM Dollar Bond Fund, Inc.Bond1.250%
ALFM Euro Bond Fund, Inc.Bond0.750%
ALFM Peso Bond Fund, Inc.Bond1.000%
ATRAM Corporate Bond Fund, Inc.Bond1.200%
ATRAM Total Return Dollar Bond Fund, Inc.Bond1.000%
Cocolife Fixed Income Fund, Inc.Bond?
Ekklesia Mutual Fund Inc.Bond0.875%
First Metro Save and Learn Dollar Bond Fund, Inc.Bond1.750%
First Metro Save and Learn Fixed Income Fund,Inc.Bond1.750%
Grepalife Dollar Bond Fund Corp.Bond?
Grepalife Fixed Income Fund Corp.Bond?
PAMI Global Bond Fund, IncBond2.000%
Philam Bond Fund, Inc.Bond1.500%
Philam Dollar Bond Fund, Inc.Bond1.500%
Philequity Dollar Income Fund Inc.Bond1.500%
Philequity Peso Bond Fund, Inc.Bond1.500%
Soldivo Bond Fund, Inc.Bond1.500%
Sun Life of Canada Prosperity Bond Fund, Inc.Bond1.000%
Sun Life Prosperity Dollar Abundance Fund, Inc.Bond1.500%
Sun Life Prosperity GS Fund, Inc.Bond1.000%
ALFM Growth Fund, Inc.Equities2.000%
ATRAM Alpha Opportunity Fund, Inc.Equities2.000%
ATRAM AsiaPlus Equity Fund, Inc.Equities0.500%
ATRAM Philippine Equity Opportunity Fund, Inc.Equities2.000%
Climbs Share Capital Equity Investment Fund Corp.Equitiesn/a
First Metro Consumer Fund on MSCI Phils. Inc.Equities1.750%
First Metro Save and Learn Equity Fund,Inc.Equities1.875%
MBG Equity Investment Fund, Inc.Equities2.000%
One Wealthy Nation Fund, Inc.Equities1.875%
Philam Strategic Growth Fund, Inc.Equities2.000%
Philequity Dividend Yield Fund, Inc.Equities3.000%
Philequity Fund, Inc.Equities1.000%
Soldivo Strategic Growth Fund, Inc.Equities2.250%
Sun Life Prosperity Philippine Equity Fund, Inc.Equities2.000%
Sun Life Prosperity World Voyager Fund, Inc.Equities1.750%
United Fund, Inc.Equitiesn/a
PAMI Equity Index Fund, Inc.Index1.500%
Philequity MSCI Philippine Index Fund, Inc.Index3.000%
Philequity PSE Index Fund Inc.Index1.000%
Philippine Stock Index Fund Corp.Index1.000%
Sun Life Prosperity Philippine Stock Index Fund, Inc.Index1.000%
ALFM Money Market Fund, Inc.Money market0.500%
First Metro Save and Learn Money Market Fund, Inc.Money market0.500%
Philam Managed Income Fund, Inc.Money market ? 
Sun Life Prosperity Dollar Starter Fund, Inc.Money market0.250%
Sun Life Prosperity Money Market Fund, Inc.Money market0.250%

So I’ve created a comparison on the effect of the management fee. Just like what I did with the table on sales load, it has the following assumptions.

  • Compound interest of 10%.
  • Sales load of 2%.
  • Initial ₱10,000 and monthly ₱1,000 investment.
  • Time horizon is 30 years.
YearDepositZero-fee1%2%3%
122,00023,67022,96522,73322,501
234,00038,76737,30136,67536,053
346,00055,44052,91451,70450,513
458,00073,85369,91667,90565,942
570,00094,18788,43185,37082,404
10130,000232,489208,861195,384182,815
15190,000459,697393,310355,538321,684
20250,000832,972675,807588,687513,740
25310,0001,446,2371,108,473928,099779,352
30370,0002,453,8191,771,1361,422,2051,146,695

Looking at the table, it’s obvious that going for the lowest management fee is the right choice.

The effect of exit fee on mutual fund earnings

Another fee that you have to be careful too would be the exit fee.

It is assessed starting from the day that you put your money in even if it’s your additional investment or top-up.

There’s really nothing special that you need to do. So you can avoid paying the exit fee, just choose the fund either no holding period, pick a fund with the shortest holding period or withdraw your money after the holding period.

NameTypeExit feeHolding
ATRAM Dynamic Allocation Fund, Inc.Balanced1.12%90 days
ATRAM Philippine Balanced Fund, Inc.Balanced1.12%90 days
Bahay Pari Solidaritas Fund, Inc.Balanced1.00%6 months
Cocolife Dollar Fund Builder, Inc.Balanced1.50%1 year
First Metro Save and Learn Balanced Fund Inc.Balanced1.00%6 months
Grepalife Balanced Fund CorporationBalanced2.00%1 year
NCM Mutual Fund of the Phils., Inc.Balanced1.00%6 months
PAMI Asia Balanced Fund, Inc.Balanced1.00%6 months
PAMI Horizon Fund, Inc.Balanced1%6 months
Philam Fund, Inc.Balanced1.00%6 months
Sun Life of Canada Prosperity Balanced Fund, Inc.BalancedNoneNone
Sun Life Prosperity Achiever Fund 2028, Inc.Balanced5%5 years
Sun Life Prosperity Achiever Fund 2038, Inc.Balanced5%5 years
Sun Life Prosperity Achiever Fund 2048, Inc.Balanced5%5 years
Sun Life Prosperity Dollar Advantage Fund, Inc.BalancedNoneNone
Sun Life Prosperity Dollar Wellspring Fund, Inc.Balanced1%180 days
Sun Life Prosperity Dynamic Fund, Inc.Balanced1%30 days
ALFM Dollar Bond Fund, Inc.Bond1%6 months
ALFM Euro Bond Fund, Inc.Bond1%6 months
ALFM Peso Bond Fund, Inc.Bond1%90 days
ATRAM Corporate Bond Fund, Inc.Bond5%6 months
ATRAM Total Return Dollar Bond Fund, Inc.Bond5%2 years
Cocolife Fixed Income Fund, Inc.Bond3.50%1 year
Ekklesia Mutual Fund Inc.Bond1%6 months
First Metro Save and Learn Dollar Bond Fund, Inc.Bond1%6 months
First Metro Save and Learn Fixed Income Fund,Inc.Bond1%6 months
Grepalife Dollar Bond Fund Corp.Bond2%1 year
Grepalife Fixed Income Fund Corp.Bond2%1 year
PAMI Global Bond Fund, IncBond1%6 months
Philam Bond Fund, Inc.Bond1%6 months
Philam Dollar Bond Fund, Inc.Bond1%6 months
Philequity Dollar Income Fund Inc.Bond1%2 years
Philequity Peso Bond Fund, Inc.Bond1%2 years
Soldivo Bond Fund, Inc.Bond1.12%6 months
Sun Life of Canada Prosperity Bond Fund, Inc.BondNoneNone
Sun Life Prosperity Dollar Abundance Fund, Inc.BondNoneNone
Sun Life Prosperity GS Fund, Inc.BondNoneNone
ALFM Growth Fund, Inc.Equities1.00%90 days
ATRAM Alpha Opportunity Fund, Inc.Equities1.12%90 days
ATRAM AsiaPlus Equity Fund, Inc.Equities1.25%90 days
ATRAM Philippine Equity Opportunity Fund, Inc.Equities1.12%90 days
Climbs Share Capital Equity Investment Fund Corp.Equitiesn/an/a
First Metro Consumer Fund on MSCI Phils. Inc.Equities1.00%6months
First Metro Save and Learn Equity Fund,Inc.Equities1.00%6months
MBG Equity Investment Fund, Inc.Equities5.00%1 year
One Wealthy Nation Fund, Inc.Equities1.00%6months
Philam Strategic Growth Fund, Inc.Equities1.00%6months
Philequity Dividend Yield Fund, Inc.Equities2.00%90 days
Philequity Fund, Inc.Equities2.00%90 days
Soldivo Strategic Growth Fund, Inc.Equities1.12%6months
Sun Life Prosperity Philippine Equity Fund, Inc.EquitiesNoneNone
Sun Life Prosperity World Voyager Fund, Inc.EquitiesNoneNone
United Fund, Inc.Equities3.50%1 year
PAMI Equity Index Fund, Inc.Index1.12%180 days
Philequity MSCI Philippine Index Fund, Inc.Index1.00%90 days
Philequity PSE Index Fund Inc.Index2.00%1 year
Philippine Stock Index Fund Corp.Index1.00%90 days
Sun Life Prosperity Philippine Stock Index Fund, Inc.Index1.00%180 days
ALFM Money Market Fund, Inc.Money market1%7 days
First Metro Save and Learn Money Market Fund, Inc.Money market17 days
Philam Managed Income Fund, Inc.Money market ?  ? 
Sun Life Prosperity Dollar Starter Fund, Inc.Money market0.25%7  days 
Sun Life Prosperity Money Market Fund, Inc.Money market0.25%7 days

Non-guaranteed returns

Mutual funds have non-guaranteed returns.

There’s no way to predict how much your money would grow from year to year, and this is especially so with equities funds, index funds, and balanced fund.

Sure, you can actually see the past returns. In fact, you may visit the Philippine Investment Fund Association (PIFA) and you can view the 5-year returns of most funds.

While these figures are helpful, they actually are not reliable in terms of knowing the future worth of your investments. That’s why a better alternative is to actually forecast under different rate of return.

In the table that you will see investments under different return on investment (ROI): 4%, 8% and 12%. As always, here are the following assumptions.

  • Management fee is 1%
  • Sales load is 2%.
  • Initial ₱10,000 and monthly ₱1,000 investment.
  • Time horizon is 30 years.
YearDeposit4%8%12%
122,00021,98822,63823,294
234,00034,53636,36438,256
346,00047,45651,03954,846
458,00060,75966,73173,240
570,00074,45583,50893,637
10130,000149,263186,501234,144
15190,000235,817330,416469,631
20250,000335,963531,509864,299
25310,000451,833812,5011,525,751
30370,000585,8991,205,1352,634,325

Takeaways

1. Avoid paying the sales load and here’s how.

2. Choose the mutual fund with the lowest management fee according to categories: equities, index, balanced, bond or money market.

3. Choose a fund with no holding period or with the least exit fee. Or you can withdraw money

4. Because returns are non-guaranteed, all you can do is to make a forecast in scenarios of varying returns.