Mutual fund wonders

For many, depositing money in the bank is our only means of saving. That's too bad as your money in the bank earns interest which is usually less than the rate of inflation. In other words, you are actually losing the value of your money by keeping it there.

One alternative is investing in mutual funds. They are organizations or corporations which manage a pool of money in behalf of individual or institutional investors. Fund managers invest the money in accordance with the fund's objectives and strategies. Through this, investors earn without having to make the investing decisions themselves.

I learned about this when I attended the Kerygma Conference at the ULTRA a few days ago. The Mutual Fund Management Company of the Philippines, Inc. (MFMCP) was among the major sponsors of the event and they were distributing flyers to the delegates.

Based on the flyer, the MFMCP manages the Kabahayan Fund, the ATR KimEng Equity Opportunity Fund, the ATR KimEng Money Market Fund, and the MFMCP-Aizawa Trust Philippine Fund. They brag that that the Kabuhayan Fund's actual one-year rate of return is 29.5% and that of the ATR KimEng Equity Opportunity Fund 39.6%.

MFMCP says there are more than 2,000 shareholders/customers in the funds that they manage. These include not only the leading corporate and public institutions in the Philippines but also a lot of individual investors. This is understandable because the minimum investment you can make is only P5,000, with the additional investments at increments of only P1,000.

Considering the rate of return and the very low entry amount required, I certainly believe that mutual funds should enter the common Filipino's financial awareness and vocabulary. Otherwise, we will continue thinking that banks are our only option.