Which mutual fund is the best mutual fund to invest in the Philippines?
Actually, it’s difficult to identify the best one given varying tastes and preferences of investors. So what we’ll do is hopefully give you enough information to help you arrive at a good decision regarding the best mutual funds that are suitable for you and worthy of your investment.
We invest with the hope that we’ll make money in the future. But this doesn’t mean we should expect to become millionaires after weeks or months of investing in mutual funds. It usually takes years — sometimes many, many years — before our investment can consistently and sustainably grow.
So to determine the best mutual funds in the Philippines, one criteria we can consider is consistency in returns. This refers to the ability of the fund to consistently deliver above-average returns in the long run.
Take, for example, two funds below: Fund A and Fund B. Which fund would you invest in?
| Yearly Performance | Fund A | Fund B | Benchmark Index |
|---|---|---|---|
| Year 1 | 12% | 30% | 15% |
| Year 2 | 6% | 5% | 10% |
| Year 3 | -10% | -20% | -12% |
| Year 4 | -5% | -15% | -8% |
| Year 5 | 2% | -1% | 5% |
Fund B wowed us with a staggering 30% gain in Year 1. This is double the 15% performance of the benchmark index that year. But what about succeeding years? Was it able to deliver consistent above-average returns? Not quite.
In Year 2, for example, while the benchmark index grew by 10%, it only managed to book a 5% return. Worst, in Year 3, while the benchmark posted a loss of -12%, Fund B lost a much bigger -20%.
Most investors typically prefer a fund that generates stable returns over one-time, big-time profits that cannot be sustainably achieved. Since most investors dislike volatility and unpredictability, despite Fund B’s “flash-in-the-pan” performance in Year 1, intelligent investors would choose Fund A instead of Fund B because of Fund A’s better performance over the long run.
Key lesson: Don’t be blinded by “flash-in-the-pan” returns, or high profits in the short run which cannot be duplicated in succeeding years. For us here in PinoyMoneyTalk, consistency is key. We personally prefer funds that can deliver consistent above-average long-term performance.
This is the reason why, in our list of best performing mutual funds below, we ranked Philippine mutual funds based on long-term returns, as measured by their five-year performance from January 2016 to December 2020.
This is our list of Top 10 mutual funds in the Philippines with the highest 5-year returns from 2016 to 2020.
Best Mutual Funds in the Philippines (based on 5-Year Returns)
| Rank | Mutual Fund | 5-Year Gain | Type |
|---|---|---|---|
| 1 | Cocolife Fixed Income Fund | 4.92% | Bond Fund |
| 2 | Sun Life of Canada Prosperity Bond Fund | 3.48% | Bond Fund |
| 3 | Philam Bond Fund | 3.06% | Bond Fund |
| 4 | Sun Life Prosperity GS Fund | 2.86% | Bond Fund |
| 5 | Philequity Peso Bond Fund | 2.83% | Bond Fund |
| 6 | ALFM Peso Bond Fund | 2.82% | Bond Fund |
| 7 | Philam Managed Income Fund | 2.72% | Bond Fund |
| 8 | Sun Life Prosperity Money Market Fund | 2.62% | Money Market Fund |
| 9 | Soldivo Bond Fund | 2.59% | Bond Fund |
| 10 | ALFM Money Market Fund | 2.58% | Money Market Fund |
*Note: Data were sourced from the industry association of fund managers, Philippine Investment Funds Association. We are not agents of or connected with any of the companies in this list. The list is not intended as a solicitation of investment or endorsement of any fund.
Some of you might argue that funds are not comparable with each other since each fund has varying investment mandates. That’s true.
A money market fund, for instance, is usually allowed to invest only in time deposits, government securities, or other investments that mature in one year or less. As such, they do not compare well to an equity fund investing in high-risk, high return stocks of a company listed in the Philippine Stock Exchange (PSE).
But if your primary goal is to quickly grow your money, your best bet is to invest in a fund that can provide the highest possible return, regardless of asset class. That’s our reason for identifying the 10 funds above with the highest long-term returns.
What about the best performing mutual funds for the entire year 2020?
For the year 2020, here are the 10 Best Performing Mutual Funds in the Philippines (Peso-denominated funds) that achieved the highest gains among all mutual funds from January to December 2020.
Best Performing Mutual Funds in 2020
| Rank | Mutual Fund | % Gain in 2020 | Type |
|---|---|---|---|
| 1 | Soldivo Bond Fund | 8.06% | Bond Fund |
| 2 | ATRAM Dynamic Allocation Fund | 6.77% | Balanced Fund |
| 3 | Philequity Alpha One Fund | 6.52% | Equity Fund |
| 4 | Philam Bond Fund | 5.98% | Bond Fund |
| 5 | Philequity Peso Bond Fund | 5.62% | Bond Fund |
| 6 | Philam Managed Income Fund | 5.13% | Bond Fund |
| 7 | ATRAM Philippine Balanced Fund | 4.78% | Balanced Fund |
| 8 | Sun Life of Canada Prosperity Bond Fund | 4.24% | Bond Fund |
| 9 | First Metro Save and Learn Fixed Income Fund | 3.99% | Bond Fund |
| 10 | ALFM Peso Bond Fund | 3.67% | Bond Fund |
What about the comparative performance of mutual funds in their respective asset category? We summarize them below in the fund performance ranking by mutual fund type based on returns from the period January to December 2020.
Best Mutual Funds (Equity Fund) in 2020
| Rank | Peso Equity Mutual Fund | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | Philequity Alpha One Fund | 6.52% |
| 2 | MBG Equity Investment Fund | -1.24% |
| 3 | ATRAM Alpha Opportunity Fund | -4.99% |
| 4 | First Metro Save and Learn Equity Fund | -7.26% |
| 5 | Philippine Stock Index Fund | -8.07% |
| 6 | Philam Strategic Growth Fund | -8.22% |
| 7 | Philequity Fund | -8.25% |
| 8 | Philequity PSE Index Fund | -8.28% |
| 9 | Sun Life Prosperity Philippine Stock Index Fund | -8.30% |
| 10 | PAMI Equity Index Fund | -8.65% |
| 11 | United Fund | -9.15% |
| 12 | Philequity Dividend Yield Fund | -9.22% |
| 13 | ALFM Growth Fund | -9.78% |
| 14 | Philequity MSCI Philippine Index Fund | -10.32% |
| 15 | Climbs Share Capital Equity Investment Fund | -10.48% |
| 16 | First Metro Save and Learn Philippine Index Fund | -10.99% |
| 17 | First Metro Consumer Fund on MSCI Phils. IMI | -12.68% |
| 18 | Sun Life Prosperity Philippine Equity Fund | -13.91% |
| 19 | ATRAM Philippine Equity Opportunity Fund | -14.82% |
| 20 | Soldivo Strategic Growth Fund | -15.56% |
Best ETF in the Philippines in 2020
| Rank | Exchange Traded Fund (ETF) | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | First Metro Phil. Equity Exchange Traded Fund | -8.04% |
Best Mutual Funds (Dollar Equity) in 2020
| Rank | Dollar Equity Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | Sun Life Prosperity World Voyager FundÊ | 21.33% |
| 2 | ATRAM AsiaPlus Equity Fund | 16.97% |
Best Mutual Funds (Balanced Fund) in 2020
| Rank | Peso Balanced Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | ATRAM Dynamic Allocation Fund | 6.77% |
| 2 | ATRAM Philippine Balanced Fund | 4.78% |
| 3 | Sun Life Prosperity Achiever Fund 2028 | 0.68% |
| 4 | PAMI Horizon Fund | -0.03% |
| 5 | Philam Fund | -0.14% |
| 6 | First Metro Save and Learn Balanced Fund | -0.17% |
| 7 | Solidaritas Fund | -1.32% |
| 8 | Sun Life Prosperity Achiever Fund 2038 | -4.74% |
| 9 | Sun Life Prosperity Achiever Fund 2048 | -6.05% |
| 10 | Sun Life of Canada Prosperity Balanced Fund | -7.51% |
| 11 | Sun Life Prosperity Dynamic Fund | -8.94% |
| 12 | First Metro Save and Learn F.O.C.C.U.S. Dynamic Fund | -13.09% |
| 13 | NCM Mutual Fund of the Phils. | No data |
Best Mutual Funds (Dollar Balanced) in 2020
| Rank | Dollar Balanced Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | Sun Life Prosperity Dollar Advantage Fund | 15.40% |
| 2 | PAMI Asia Balanced Fund | 13.66% |
| 3 | Sun Life Prosperity Dollar Wellspring Fund | 6.50% |
| 4 | Cocolife Dollar Fund Builder | 2.41% |
Best Mutual Funds (Bond Fund) in 2020
| Rank | Peso Bond Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | Soldivo Bond Fund | 8.06% |
| 2 | Philam Bond Fund | 5.98% |
| 3 | Philequity Peso Bond Fund | 5.62% |
| 4 | Philam Managed Income Fund | 5.13% |
| 5 | Sun Life of Canada Prosperity Bond Fund | 4.24% |
| 6 | First Metro Save and Learn Fixed Income Fund | 3.99% |
| 7 | ALFM Peso Bond Fund | 3.67% |
| 8 | Ekklesia Mutual Fund | 3.27% |
| 9 | Sun Life Prosperity GS Fund | 3.17% |
| 10 | Cocolife Fixed Income Fund | 3.10% |
| 11 | ATRAM Corporate Bond Fund | -0.09% |
Best Mutual Funds (Dollar & Euro Bond) in 2020
| Rank | Dollar & Euro Bond Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | ATRAM Total Return Dollar Bond Fund | 6.06% |
| 2 | Philam Dollar Bond Fund | 5.50% |
| 3 | Philequity Dollar Income Fund | 3.35% |
| 4 | ALFM Dollar Bond Fund | 3.31% |
| 5 | First Metro Save and Learn Dollar Bond Fund | 3.10% |
| 6 | Sun Life Prosperity Dollar Abundance Fund | 1.52% |
| 7 | PAMI Global Bond Fund | -0.08% |
| 8 | ALFM Euro Bond Fund | -0.28% |
Best Mutual Funds (Money Market Fund) in 2020
| Rank | Peso Money Market Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | ALFM Money Market Fund | 3.16% |
| 2 | Sun Life Prosperity Money Market Fund | 2.50% |
| 3 | First Metro Save and Learn Money Market Fund | 2.12% |
Best Mutual Funds (Dollar Money Market) in 2020
| Rank | Dollar Money Market Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | Sun Life Prosperity Dollar Starter Fund | 1.36% |
Best Mutual Funds (Feeder Fund) in 2020
| Rank | Peso Feeder Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | Sun Life Prosperity World Equity Index Feeder Fund | No data |
Best Mutual Funds (Dollar Feeder Fund) in 2020
| Rank | Dollar Feeder Mutual Funds | % Gain (Loss) in 2020 |
|---|---|---|
| 1 | ALFM Global Multi-asset Income Fund | -1.01% |
Are Equity Funds always the best investment?
One would expect that Equity Funds would always yield the highest return compared to all asset classes. That’s because equity funds are invested in stocks and stocks, no doubt, generate the highest profits every year. Right?
Well, guess what, this is NOT true all the time!
Stocks and equity funds typically underperform during times of economic crises which we’re seeing at present because of the COVID-19 pandemic.
As investors flee stock markets, funds flow into the contrarian and more conservative asset class: Fixed Income instruments, such as Bonds. This explains why Bond Funds typically outperform Equity Funds during times of market upheavals.
In fact, based on our monitoring of the returns of mutual funds in the Philippines in the past years, we found two interesting conclusions:
1. No single type of mutual funds (equity or balanced or bond funds) was able to consistently achieve the highest returns year after year after year; and
2. There were years that Bond Funds made more money than Equity Funds, while in some years, Money Market Funds even outperformed Balanced Funds!
These insights were based on the following rankings of Philippine mutual funds with the highest gains in the past years.
As you can see, during some years of good economic growth, Equity Funds typically dominate other types of mutual funds. But during times of economic recession, Bond Funds and even Money Market Funds appear to be more profitable compared to Equity Funds.
Top 10 Mutual Funds with Highest Gains in 2019
| Rank | Mutual Fund / ETF | Type | 2019 Profit (Loss) % |
|---|---|---|---|
| 1 | Philam Bond Fund | Bond Fund | 11.54% |
| 2 | Sun Life of Canada Prosperity Bond Fund | Bond Fund | 11.18% |
| 3 | Sun Life Prosperity GS Fund | Bond Fund | 10.47% |
| 4 | Soldivo Bond Fund | Bond Fund | 8.16% |
| 5 | PAMI Horizon Fund | Balanced Fund | 7.62% |
| 6 | Philequity Peso Bond Fund | Bond Fund | 7.38% |
| 7 | First Metro Save and Learn Fixed Income Fund | Bond Fund | 6.97% |
| 8 | Philam Fund | Balanced Fund | 6.88% |
| 9 | NCM Mutual Fund of the Phils. | Balanced Fund | 6.51% |
| 10 | Philam Managed Income Fund | Money Market Fund | 6.29% |
In 2019, equity funds seem to have taken a backseat in terms of returns. Bond funds and balanced funds were the top performers, generating as much as double-digit returns while stock funds merely settled in the single-digit, just like the PSEi’s full-year 2019 return of 4.68%.
In addition, even money market funds — which typically invest in securities with maturities of 1 year or less — outperformed stock funds.
This only goes to show that investing in equity funds doesn’t give an assurance of higher returns year after year after year.
Top 10 Mutual Funds with Highest Gains in 2018
| Rank | Mutual Fund | Type | 2018 Profit (Loss) % |
|---|---|---|---|
| 1 | Cocolife Fixed Income Fund | Bond Mutual Fund | 5.25% |
| 2 | Sun Life Prosperity Money Market Fund | Money Market Mutual Fund | 2.79% |
| 3 | ALFM Money Market Fund | Money Market Mutual Fund | 2.73% |
| 4 | Philam Managed Income Fund | Money Market Mutual Fund | 2.08% |
| 5 | ALFM Peso Bond Fund | Bond Mutual Fund | 1.86% |
| 6 | Ekklesia Mutual Fund | Bond Mutual Fund | 1.34% |
| 7 | Philequity Peso Bond Fund | Bond Mutual Fund | 0.25% |
| 8 | First Metro Save and Learn Fixed Income Fund | Bond Mutual Fund | -0.33% |
| 9 | Sun Life of Canada Prosperity Bond Fund | Bond Mutual Fund | -0.44% |
| 10 | Sun Life Prosperity GS Fund | Bond Mutual Fund | -0.70% |
In 2018, the Philippine Stock Exchange index (PSEi) ended the year with a dismal performance of -12.76%. This meant an amount of P100,000 invested at the PSEi at the beginning of 2018 was just worth P87,240.00 — a loss of P12,760 — by the end of December 2018.
Unsurprisingly, equity mutual funds performed poorly, which is why the list of Top 10 Mutual Funds in 2018 is actually dominated by “Bond Mutual Funds” as seen in the table above.
Money market mutual funds, supposedly the most conservative category of funds, managed to have 3 funds in the Top 10 list — proof again that any type of fund can be the best performing given the prevailing sentiment in the market.
Also notice that only seven (7) funds, out of dozens of mutual funds in the list, managed to end the year with a positive gain. All the rest incurred a loss.
This is the reason why, even though we’re showing the Top 10 best performing funds, the last 3 in the list obtained negative performance, but these are supposedly the best ones already with the least amount of losses compared to other funds.
Top 10 Mutual Funds with Highest Gains in 2017
The year 2017 was again a banner year for equity mutual funds in the Philippines. With the PSEi reaching all-time high levels that year, the list of Top 10 Best Mutual Funds in 2017 was all filled by equity funds with double-digit gains.
| Rank | Mutual Fund | Type | 2017 Profit (Loss) % |
|---|---|---|---|
| 1 | Philequity PSE Index Fund | Equity Mutual Fund | 24.71% |
| 2 | United Fund | Equity Mutual Fund | 24.57% |
| 3 | Sun Life Prosperity Philippine Stock Index Fund | Equity Mutual Fund | 24.56% |
| 4 | Philippine Stock Index Fund | Equity Mutual Fund | 24.39% |
| 5 | PAMI Equity Index Fund | Equity Mutual Fund | 24.08% |
| 6 | Philequity Fund | Equity Mutual Fund | 23.01% |
| 7 | Sun Life Prosperity Philippine Equity Fund | Equity Mutual Fund | 22.04% |
| 8 | First Metro Save and Learn Equity Fund | Equity Mutual Fund | 22.02% |
| 9 | ALFM Growth Fund | Equity Mutual Fund | 21.77% |
| 10 | ATRAM Alpha Opportunity Fund | Equity Mutual Fund | 21.46% |
Top 10 Mutual Funds with Highest Gains in 2016
| Rank | Mutual Fund | Type | 2016 Profit (Loss) % |
|---|---|---|---|
| 1 | ATRAM Alpha Opportunity Fund | Equity Mutual Fund | 11.71% |
| 2 | Cocolife Fixed Income Fund | Bond Mutual Fund | 5.85% |
| 3 | ATRAM Philippine Equity Opportunity Fund | Equity Mutual Fund | 4.86% |
| 4 | ATRAM Philippine Balanced Fund | Balanced Mutual Fund | 3.39% |
| 5 | ALFM Peso Bond Fund | Bond Mutual Fund | 2.06% |
| 6 | Sun Life Prosperity Money Market Fund | Money Market Mutual Fund | 1.90% |
| 7 | Ekklesia Mutual Fund | Bond Mutual Fund | 1.56% |
| 8 | Philam Bond Fund | Bond Mutual Fund | 1.22% |
| 9 | ALFM Money Market Fund | Money Market Mutual Fund | 1.13% |
| 10 | Soldivo Bond Fund | Bond Mutual Fund | 0.51% |
And yet in 2016, it was again a different story for mutual fund companies. Bond mutual funds dominated the list that year, with 5 funds being included in the Top 10 list.
Meanwhile, only 2 equity funds managed to break into the Top 10, with 2 money market funds and 1 balanced fund completing the list.
As mentioned earlier, there’s no perfect type of mutual fund that can achieve above-average returns year after year after year. It is our task as investors to constantly monitor the performance of our investment and to tweak our investment choices based on the fund performance and our risk appetite.
With this comprehensive and extensive article, we hope we’re able to help you decide which mutual fund is appropriate for you! Happy investing!
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