Best Investment Funds In The Philippines: Where To Invest?

There are many investment funds in the Philippines, but which is the best? Well, that depends on your financial goals, resources, personal skills, risk tolerance, and preference.

According to the Bangko Sentral ng Pilipinas (BSP) 2021 Financial Inclusion Survey, only 36% of Filipinos have some sort of investment. For many Filipinos, there’s only one way to make money—by working for it. However, there’s another way to make money—by making it work for you. This entails investing your money so that it will grow.

There are three types of investments to choose from: ownership investments, lending investments, and cash equivalents. Ownership investments are the most profitable but are also considered the riskiest. Lending investments are considered less volatile and low-risk because you can take your money back anytime. Lastly, cash equivalents are the least risky of all investment types and are ideal for short-term investors.

- Variable Unit-Linked Life Insurance (VUL)

- SSS WISP Plus / Pag-IBIG MP2

- GFunds

- Bonds

- Mutual funds

- Unit investment trust funds (UITFs)

- Stocks

Investment funds for beginners

The world of investments can seem daunting, especially for beginners. However, taking the first step is crucial for building long-term wealth. Here are some investment fund options that are perfect for beginners in the Philippines:

Time Deposits

Also known as certificates of deposit (CDs), time deposits are savings accounts with a fixed term and interest rate. They offer a guaranteed return on your investment, making them a safe option for beginners who want to preserve their capital. The minimum initial placement for a time deposit account is ₱1,000, and they are available at most commercial banks in the Philippines.

Bonds

Bonds are debt securities issued by governments or corporations to raise capital. When you buy a bond, you lend money to the issuer and receive periodic interest payments in return. Bonds are considered less risky than stocks and can provide a steady income stream. The minimum amount required to invest in bonds is ₱5,000, and they are available at major banks in the Philippines.

Unit Investment Trust Funds (UITFs)

UITFs are pooled funds managed by banks and trust corporations. They invest in a diversified portfolio of stocks, bonds, or other securities based on a specific investment objective. UITFs offer beginners the opportunity to invest in a professionally managed fund with a relatively low initial investment requirement, usually starting from ₱5,000.

Mutual Funds

Mutual funds are professionally managed investment funds that pool money from multiple investors to invest in a diversified portfolio of stocks, bonds, and other securities. Mutual funds are ideal for beginners as they are managed by professional fund managers, who make investment decisions on behalf of the investors. The minimum investment amount for mutual funds in the Philippines typically ranges from ₱1,000 to ₱5,000.

Stocks

Stocks represent ownership in a company and offer the potential for capital appreciation and dividends. While investing in stocks carries more risk than other options, it also offers the potential for higher returns over the long term. Beginners can start investing in stocks through online platforms such as UTrade, which provides real-time market information and a user-friendly interface. The minimum amount required to invest in stocks is ₱3,500.

GInvest

GInvest is a feature offered by GCash, a popular e-wallet in the Philippines. With just ₱50, you can start investing in a variety of funds, including fixed-income funds, bonds, stocks, and mutual funds. GInvest is a great option for beginners as it doesn't charge any commission or sales fees.

SSS Workers' Investment and Savings Program (WISP) Plus

The SSS WISP Plus is a voluntary provident fund offered by the Social Security System (SSS) to its members. It provides a competitive, convenient, and tax-free savings scheme. The minimum amount required to contribute is ₱500 per transaction, and it is open to all SSS members. The interest rate for SSS WISP Plus is 3% and above, depending on the performance of the allocated investment.

Retail Treasury Bonds (RTB)

Retail Treasury Bonds (RTB) are issued by the Bureau of Treasury to raise funds for the government. RTBs offer attractive interest rates and flexible tenures, making them a good investment option for beginners. The minimum amount required to invest in RTB is ₱5,000, and they are available at major banks in the Philippines.

Pag-IBIG MP2

Pag-IBIG MP2 is a savings program offered by the Pag-IBIG Fund, a government-owned and controlled corporation that provides affordable housing to Filipinos. Pag-IBIG MP2 offers higher dividend rates than the regular Pag-IBIG savings program, currently at around 6%. The minimum amount required to invest is ₱500 per remittance, and it is open to all Pag-IBIG members and former members.

High Dividend-Paying Funds

High dividend-paying funds invest in stocks with high dividend yields and low price-to-earnings ratios. They provide regular dividend income and the potential for capital appreciation. The minimum amount required to invest in high dividend-paying funds is ₱100,000, and they are available through banks such as PNB (Allianz PNB Life).

Personal Equity and Retirement Account (PERA)

PERA is a government-sponsored retirement program that allows individuals to invest in various investment products, such as money market funds, bonds, and stocks. It offers tax incentives and the flexibility to choose your own fund manager. The minimum amount required to invest in PERA is ₱2,000, and it is available through banks such as BPI, BDO, and Landbank.

Before diving into any investment, it is important to define your financial goals and assess your risk tolerance. It is also crucial to educate yourself about the different investment options, market dynamics, and risk factors. Additionally, consider seeking guidance from a financial professional to make informed investment decisions.

Investment funds for the short and long-term

The best investment funds for the short and long-term in the Philippines depend on your financial goals, resources, risk tolerance, and personal preferences. Here are some options for both short and long-term investment funds in the Philippines:

Short-term investment funds:

• Money market funds: These are good for conservative investors and newbies as they are invested in low-risk, fixed-income securities like corporate bonds and government treasury bills.
• Short-term corporate bond funds: Corporate bonds are generally safe, and bond funds diversify your investment across different companies and industries.
• High-yield savings accounts: These accounts offer higher interest rates than traditional savings accounts and are a good option for those seeking low-risk investments.
• Time deposits: Time deposits offer higher interest rates than savings accounts and are suitable if you want to invest for a fixed period.
• Certificates of Deposits (CDs): CDs are a form of time deposit that allows you to hold money in your account for a specific period, and you can choose the maturity date.

Long-term investment funds:

• Stock market: Investing in the stock market is ideal for long-term goals as it offers high earnings over time, but it is risky due to market volatility.
• Real estate: Buying property can be a good long-term investment, but it requires caution as it may involve taking out a loan with a long repayment period.
• Long-term bonds: These bonds have a maturity period of 20-30 years and can offer high-interest yields, but their value can decrease when interest rates are high.
• Exchange-Traded Funds (ETFs): ETFs are a diversified investment that tracks underlying indexes and is more affordable than mutual funds.
• Mutual funds: Mutual funds pool money from multiple investors to create a large fund managed by professionals. They offer portfolio management and are suitable for long-term growth.

Investment funds for high returns

The best investment fund for you will depend on your financial goals, resources, personal skills, risk tolerance, and preferences. That said, here are some investment funds to consider if you're looking for high returns in the Philippines.

Variable Unit-Linked Life Insurance (VUL)

VUL combines life insurance and investment into a single product. VUL is ideal for first-time investors because professional fund managers handle the money and make investment decisions for you. Singlife's Protect Your Goals VUL plan allows you to start investing for as little as ₱500 per month.

Pag-IBIG MP2

Pag-IBIG MP2 is a voluntary government savings program that lets Pag-IBIG members invest for as little as ₱500 per month over five years. It offers historically higher dividend rates than other instruments in the market. The latest dividend rate for 2021 is 6% per annum.

GFunds

GFunds is GCash's investment marketplace, allowing you to invest in some of the country's most trusted investment companies. You can start investing with as little as ₱50. GFunds offers funds for both moderately conservative and aggressive investors.

Bonds

Bonds are debt obligations issued by companies and treasuries. If you invest in bonds, you'll get paid a set amount over a certain period, regardless of the company's gains and losses. This is a low-risk but low-profit investment.

Mutual Funds and UITFs

Mutual funds and UITFs are ideal for beginners because a professional fund manager makes investment decisions for the investors. Mutual funds pool money from investors and invest in various assets such as stocks and bonds. UITFs are similar to mutual funds, but they are handled by banks instead of insurance and brokerage companies.

Stocks

Investing in stocks makes you a part-owner of a company, giving you the right to a portion of the company's value and income. Stocks are among the riskiest yet most profitable types of investments.

Investment funds for low risk

There are several investment options for risk-averse investors in the Philippines. Here are some of the best low-risk investment funds in the country:

• Time deposits: Time deposits are ideal for investors who are afraid of taking on too much risk but still want to earn higher interest than a traditional savings account. Time deposits typically offer interest rates of up to more than 4%, while most savings accounts have interest rates of less than 1%. With a time deposit, you agree to set aside a certain amount of money for a specific period, and you earn a predetermined interest rate upon maturity.
• Money market funds: Money market funds are a good option for newbie and conservative investors as they aim to preserve capital in the short term (usually one year or less). These funds invest in corporate bonds, government treasury bills, and other risk-free, short-term securities.
• Short-term corporate bond funds: Corporate bonds are generally considered safe, as they are issued by corporations with high prospects for revenue or profitability. Bond funds are a collection of corporate bonds from different companies, and they pay interest, usually on a monthly basis. While short-term corporate bond funds are not insured, their diversified nature makes them a relatively safe investment option.
• High-yield savings accounts: High-yield savings accounts allow you to earn interest on your money while keeping it easily accessible. They are perfect for conservative investors who are willing to sacrifice high profits for low investment risk.
• Certificates of Deposit (CDs): CDs are a form of time deposit that allows you to hold your money in an account for a specific period, ranging from weeks to years. CDs are insured by the PDIC, making them a safe investment option.
• Treasury and bond funds: Treasury bills, issued by the government, and corporate or government bonds are considered good investment options for those seeking low-risk opportunities. Bonds are debt obligations that promise to pay a set amount over a certain period, regardless of the company's gains or losses. Treasury bills typically require a minimum investment of ₱50,000.
• Variable Unit-Linked Life Insurance (VUL): VUL combines life insurance and investment into a single product. VUL is a good option for first-time investors as professional fund managers handle the money and make investment decisions on their behalf. Singlife's Protect Your Goals VUL plan, for example, allows you to start investing for as low as ₱500 per month.
• Pag-IBIG Modified Pag-IBIG II (MP2): Pag-IBIG MP2 is a voluntary government savings program that allows Pag-IBIG members to invest for as low as ₱500 per month over five years. MP2 offers historically higher dividend rates than other instruments in the market, and earnings are tax-free and guaranteed by the Philippine government.
• GInvest: GInvest is an investment platform accessible through the GCash app. It offers several low-risk investment funds managed by ATRAM Trust Corporation, including the ATRAM Peso Money Market Fund, ATRAM Total Return Peso Bond Fund, ATRAM Philippine Equity Smart Index Fund, and ATRAM Global Technology Feeder Fund.

Investment funds for diversification

Diversifying your investment portfolio is a great way to reduce risk and increase potential returns. Here are some investment funds to consider for diversification in the Philippines:

• Mutual Funds & UITFs: Mutual funds are investment companies that pool money from many investors to create a large fund managed by professional fund managers. UITFs (Unit Investment Trust Funds) are similar but are managed by banks instead of mutual fund companies. These investment vehicles offer diversification and potential for higher returns, making them suitable for young and new investors.
• Index Funds: These funds track the performance of a particular market or industry index, such as the Philippine Stock Exchange Index (PSEi) or the S&P 500. By investing in index funds, you can achieve instant broad diversification at a lower cost compared to mutual funds.
• Equity Funds: Equity funds primarily invest in stocks and may include some cash for liquidity. They are actively managed, aiming to beat the market/index rather than merely mirroring its performance like index funds.
• Balanced Funds: These funds have a diversified portfolio consisting of both bonds and stocks, with stocks typically making up 40-60% of the fund. They offer a mix of growth and income, making them suitable for investors seeking a balance between risk and stability.
• Bond Funds: Bond funds primarily invest in bonds and other fixed-income securities. They are considered relatively stable and predictable investments due to regular interest payments. Bond funds can be classified by maturity (short-term, medium-term, long-term) or by the issuer (government, corporate, etc.).
• Feeder Funds: Feeder funds pool capital and invest it in a larger target fund, typically an offshore fund or one with high minimum investment requirements. This provides investors with access to global equity funds that may not be otherwise accessible.
• Exchange-Traded Funds (ETFs): ETFs are portfolios of bonds, investments, and stocks that are passively managed and traded in real time. They are more affordable than mutual funds as they don't charge load fees. Examples of ETFs include currency ETFs, commodity ETFs, and industry/sector ETFs.
• Personal Equity and Retirement Account (PERA): PERA is a voluntary investment program that encourages Filipinos to save for retirement by offering tax benefits. It allows investors to pick certain investment vehicles, including index funds, mutual funds, and UITFs.

Frequently asked questions