Mutual fund laggard
It's not surprising that the
Philippines lags behind other Asian countries when it comes to the mutual fund industry. According to the
AIM study, our assets under management (AUM) as of end of 2003 is a mere $792 million (as of end of March 2004, it has gone up to $1 billion), compared to Indonesia, which has $8 billion, already considered one of the smallest.
Worse, China's mutual fund industry, just 6 years old, has $20 billion AUM. To think we started in the 1950s (though it only took off in the early nineties). Here's how we fare:
1. Japan - $349 billion with 2,617 funds
2. South Korea - $250 billion with 6,736 funds
3. Hong Kong - $250 billion with 963 funds
4. Taiwan - $76 billion with 401 funds
5. China - $20 billion with 110 funds
6. Malaysia - $18 billion with 217 funds
7. Thailand - $11 billion with 333 funds
8. Indonesia - $8 billion with 186 funds
9. Philippines - $792 million with 21 funds
Why are we such laggards? Well, for one, the
requirements to put up an investment company are quite prohibitive (at least P50 million in capital), opening the business to just a few players. There's not much public education on and promotion of mutual funds. And, frankly, Filipinos have a
very low savings rate.
That's a pity as mutual funds offer better rates than most savings and time deposits offered by commercial banks. [Disclosure: I'm a registered mutual fund agent, but the facts speak for themselves.] You can
check the rates of returns of available mutual funds and find bond funds that return more than 8% and equity funds that return more than 10%.
So, seriously consider mutual funds as part of your investment portfolio. It's the primary investment vehicle for many regular folks in the U.S. and other countries. And it is where we put most of our long-term savings.
