Friday, March 26, 2010


A mutual fund is a company that pools investors' money to make multiple types of investments, known as the portfolio. Stocks, bonds, and money market funds are all examples of the types of investments that may make up a mutual fund.

The mutual fund is managed by a professional investment manager who buys and sells securities for the most effective growth of the fund. As a mutual fund investor, you become a "shareholder" of the mutual fund company. When there are profits you will earn dividends. When there are losses, your shares will decrease in value. The value of a share of the mutual fund, called the Net Asset Value (NAV), is calculated daily based on the fund’s total value divided by the total number of outstanding shares.

Mutual funds are, by definition, diversified, meaning they are made up a lot of different investments. That tends to lower your risk (avoiding the old "all of your eggs in one basket" problem).

Because someone else manages them, you don't have to worry about diversifying individual investments yourself or doing your own record keeping. That makes it easier to just buy them and forget about them. That's not always the best strategy, however -- your money is in someone else's hands, after all.

Since the fund manager's compensation is based on how well the fund performs, you can be assured they will work diligently to make sure the fund performs well. Managing their fund is their full-time job!
Mutual funds can be open-ended or closed-ended. But many people consider all mutual funds to be open-ended, while putting closed-ended funds in another category.

"Open-ended" means that shares are issued in the fund (or sold back to the fund) whenever anyone wants them. With closed-ended funds, only a certain number of shares can be issued for a particular fund, and they can only be sold back to the fund when the fund itself terminates. (You can sell closed-ended funds to other investors on the secondary market, though.)

Load refers to the sales charges added to a mutual fund when you purchase it. The load charge goes to the fund salesperson as a commission and payment for their research services. Load charges can be up to 8.5 percent of the selling price and can be figured in as a front-end load (meaning you pay it when you buy the mutual fund) or a back-end load (meaning you pay when you sell the mutual fund).

Many mutual funds are no-load funds. Yes, that means there is no sales fee charged and the fund is direct-marketed so you can buy it without the help of a salesperson. With the wealth of information on the Internet today, it is certainly easier to make smart choices yourself to save money.
In addition to no-load funds, there are also funds that charge up to 3.5 percent as a sales fee. These are called low-load funds and can still be a good deal.

Mutual funds fall into three categories:
•    Equity funds are made up of investments of only common stock. These can be riskier (and earn more money) than other types.
•    Fixed-income funds are made up of government and corporate securities that provide a fixed return and are usually low risk.
•    Balanced funds combine both stocks and bonds in the investment pool and offer a moderate to low risk.

While low risk may sound good, it is also accompanied by lower rates of return-meaning you risk less, but your investment won't earn as much. You have to decide how much risk you're willing to take on before you invest your money.

If you have invested in a college savings fund or a 401k account, chances are good that already own a few mutual funds. Mutual funds are great for long-term investments like these. You can also buy mutual funds directly from a mutual fund company.

Most of these offer no-load funds (or sometimes low-load funds). You can find lists of mutual fund companies on the Internet and purchase shares by simply filling out an application and mailing a check. Once you are a shareholder, you will receive statements telling you how the fund is doing as well as how much your own investment is growing. You can also set up monthly bank transfers to automatically buy more shares every month.

Choosing which mutual funds to invest in ultimately depends on the investor’s growth goal and risk tolerance. If the purpose is capital growth, equity funds are the way to go. Bond funds are chosen, on the other hand, if the investor prefers capital preservation over risky capital growth. For those who want medium risk and medium growth, balanced funds are the best option. Money market funds are for those who wish to earn a conservative amount of return in the short-term.
Remember to do your research and select a mutual fund that fits the level of risk you are willing to take with your hard-earned cash. Then just sit back and hope for the best!

List of Mutual Fund companies in the Philippines
Stock Funds
•    ATR- Kim Eng Equity Opportunity Fund –
•    DWS Deutsche Philippine Equity Fund, Inc.
•    First Metro Save and Learn Equity Fund –
•    Philam Strategic Growth Fund, Inc. –
•    Philequity Fund, Inc. –
•    Philequity PSE Index Fund Inc.
•    Sun Life Prosperity Phil. Equity Fund, Inc. –
•    United Fund, Inc.
Balanced Funds
•    ALFM Growth Fund, Inc.
•    First Galleon Family Fund, Inc.
•    First Metro Save and Learn Balanced Fund Inc.
•    GSIS Kinabukasan Fund
•    MFCP Kabuhayan Fund –
•    Optima Balanced Fund, Inc.
•    Philam Fund, Inc. –
•    Sun Life Prosperity Balanced Fund, Inc. –
•    Sun Life Prosperity Dollar Advantage Fund, Inc. –
Bond Funds
•    AIG Global Bond Fund Phils., Inc.
•    ALFM Dollar Bond Fund, Inc.
•    ALFM Euro Bond Fund, Inc.
•    ALFM Peso Bond Fund, Inc.
•    Cocolife Fixed Income Fund, Inc.
•    DWS Deutsche Philippine Fixed Income
•    Ekklesia Mutual Fund Inc.
•    First Metro Save and Learn Fixed Income
•    Grepalife Dollar Bond Fund (USD$) –
•    Grepalife Fixed Income Fund, Inc. –
•    MAA Privilege Dollar Fixed Income Fund, Inc. –
•    MAA Privilege Euro Fixed Income Fund, Inc. –
•    Philam Bond Fund, Inc. –
•    Philam Dollar Bond Fund, Inc. –
•    Philam Managed Income Fund
•    Philequity Dollar Income Fund Inc.
•    Philequity Peso Bond Fund
•    Prudential Fixed Income Fund Inc.
•    Sun Life Prosperity Bond Fund, Inc. –
•    Sun Life Prosperity Dollar Abundance fund –
•    Sun Life Prosperity GS Fund –
Money Market Funds
•    ATR Kimeng Money Market Fund, Inc.
•    Sun Life Prosperity Money Market Fund, Inc. –


  1. Hi to all investors,

    As listed above, The First Galleon Family Fund, Inc. is among the duly registered mutual fund companies. However, please be informed that the Securities and Exchange Commission (SEC) has issued its advisory about the marketing plan of the First Galleon which was declared illegal and violates the provision of Investment Act. You may visit the SEC website ( for more details of the said advisory.

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