Frequently Asked Questions: Sun Life Mutual Fund

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Here are some of the Frequently Asked Questions I’ve encountered with regards to mutual funds.

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SECURITY OF INVESTORS AND FUND MANAGERS

Q: Why should I invest in Sun Life Financial’s mutual funds?
Sun Life Asset Management is the only mutual fund company in the Philippines who offers a “family of funds”. Sun Life investors can transfer their investments from one Prosperity fund to another as often as four (4) times a year without extra charges. An investor’s financial objective may change over time, and Sun Life Asset Management gives you the flexibility to adjust your portfolio according to your needs.

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Q: Should I invest in mutual funds if there’s a decline in investor confidence with regards to the local economic market?
In contrary to popular belief, a decline in the local market is not exactly a bad thing for mutual funds. In fact, this is the ideal time to buy shares for mutual funds, when prices are low. It is similar to rushing into stores when you find a “SALE” sign. You buy things at a discount. A temporary decline in the market gives investors, as well as fund managers the option to buy more shares at a discount. Furthermore, when the market improves and share prices go up, as they will, given time, the value of the equity securities will have risen along with them. Always remember that Mutual funds are better to be treated as long-term investments, which should not be bought or sold based on short-term events.

Q: What prevents the fund manager from running away with my money? How are investors protected in a mutual fund
The structure of Mutual Funds protects the interest of its shareholders. The fund manager does not have any control over the physical assets of a mutual fund except to make buying and selling decisions. The assets are held by a custodian bank, appointed by the shareholders, who in turn can not transact for these assets.

GENERATING RETURNS

Q: Why should I prefer mutual funds when I can invest directly in the stock market?
Mutual funds can serve as an alternative to investing directly in the stock market. Compared with buying stocks directly, mutual funds require a lower initial capital outlay yet allow you to achieve diversification at the same time. What this means is that in mutual funds, for a relatively small amount of money, you can afford to buy into several companies and achieve variety for your portfolio. When buying stocks directly, however, you may have to use a larger amount of money in order to achieve the same level of diversification.

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Q: What is the difference between a mutual fund and a unit investment trust fund?
Mutual funds, which is regulated by the SEC, investors are shareholders and entitled to all the rights given to shareholders (except preemptive rights) such as participating in stockholders meetings or electing directors. Clients of UITF, which are regulated by the BSP, are not shareholders and do not enjoy these rights.

Q: Are mutual fund gains taxable?
No. Mutual fund gains are exempted from taxes based on the Comprehensive Tax Reform Program (CTRP). This was done to promote long-term savings in the country.

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TERMS AND CONDITIONS

Q: How liquid are the shares of the Sun Life Prosperity Funds? If I want to redeem my investment, how long does it take to process the transaction?
In processing a fund redemption, you will get the share price of the date you submitted your request. Release of proceeds would be within (7) banking days.

Q: How much is the required minimum initial investment?
Minimum investment is one time Php5,000 to open an account and Php1,000 for subsequent investments.
For more information, please view this link: Please view Sales Load Options in this link: Opening a Mutual Funds Account

Q: Am I required to make subsequent investments after the initial investment?
No, you are not required to make subsequent investments after the initial investment. We strongly advise our investors to regularly set aside a fixed amount of money for investments, regardless of the NAVPS. This way, you automatically buy more shares when the price is low, and fewer shares when the price is high. This kind of discipline is what we call Peso Cost Averaging.

Q: Can you give me an estimated rate of return in a mutual fund?
Mutual funds are essentially long-term investments. You can get the maximum benefits from a mutual fund if you leave your money with the fund and let it grow. At the same time, the rate at which your money will grow cannot be predicted because when you invest in a mutual fund, you are investing in a diversified portfolio of securities that normally fluctuate in value. Attached is the historical returns of our fund performance.
historical returns

Q: How much am I charged when I invest?
Please view Sales Load Options in this link: Opening a Mutual Funds Account

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