Mutual fund sector’s assets grow 31% in first semester

The combined assets of the country’s mutual fund industry continue to swell, reaching P33.7 billion in six months this year or already 31 percent higher than the record amount of P25.81 billion for the entire 2002.

At the rate it is going, the Investment Company Association of the Philippines (ICAP) has estimated that total assets could double this year to more than P50 billion.

Last year, the industry turned in a record performance as its assets expanded by 126 percent from P11.4 billion in 2001.

A mutual fund is an investment vehicle that pools money from small and institutional investors, allowing them to earn through fund placements in various instruments such as government securities, equities, commercial papers and bonds.

Of the total assets of the industry, more than 90 percent or P31.3 billion are lumped in the bond or fixed income market, reflecting the kind of appetite as well as the health of the local and international bond markets.

Last year, the bond fund market exploded from a mere P8.423 billion at end-2001 to P23.5 billion, a 179 percent increase.

"It reflects the type of appetite the market has as the returns in the bond market have become more attractive over the rest of the investment field. It also indicates that the market is looking for more long-term investment products," ICAP said.

Meanwhile, the balanced fund, or a mix of investments in the bond and equities markets, reached P1.3 billion during the period, closing at P1.15 billion in 2002.

The stocks fund or those invested solely in the equities market had a net asset value of P794 million at end-June this year, still lower than P1.14 billion for the whole of 2002 as the stock market remain on a slump.

The Ayala Life Fixed Income Fund accounted for P14.6 billion, almost one half of the entire industry’s managed assets in the past two years despite not having a balanced fund or a stock fund.

On the other hand, the Philam Asset Management Inc. (PAMI), a subsidiary of the Philamlife group, manages the biggest combined assets worth nearly P14.6 billion.

The third biggest player in the mutual fund industry is the Canadian firm Sunlife Financial, which manages funds in the stocks, balanced and bond fund market for a combined portfolio of P3.4 billion.