Determine Which Mutual Fund is Best For You!

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Understanding Your Options

Which fund is most suitable for me? What are the fund options I could choose from? Why are some funds riskier than the others? Which fund generates the highest potential return? For Mutual Fund beginners, it is essential to choose the right fund for you to invest in. Understand your options to make the right decision on where you’d like to place your investment in.

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Different funds, different characteristics

  • Equity Fund

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Invested in the Stock Market. High Risk and High Potential Return.

When the market is bullish (going up), equities are the power house of a Mutual Fund investors gains. Alternatively, when the market is bearish (going down), equities takes the most damage and produces more negative returns. Sun Life Financial only invests in blue chip companies listed in Philippines Stock Exchange.

  • Dynamic Fund

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Invested in a mixture of Equities (stocks) and Bond (government securities)

If you prefer to let the fund managers to do the work for you, then Dynamic Fund is for you! Dynamic Fund gets the best of both worlds because it is not as risky as equities, but it produces more returns compared to Bond Fund.

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Fund Allocation is as follows:
During a bullish market: 90% invested in Equities, 10% invested in Bond
During a bearish market: 0% invested in Equities, 100% invested in Bond

  • Balanced Fund

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Invested in a mixture of Equities (stocks) and Bond (government securities)

Balanced Fund is similar to the Dynamic Fund with less risk involved. Like its name “Balanced”, Balanced Fund is a balanced portfolio that allows you to experience the best of both equities and bonds as well.

Fund Allocation is as follows:
During a bullish market: 65% invested in Equities, 35% invested in Bond
During a bearish market: 35% invested in Equities, 65% invested in Bond

  • Bond Fund

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Invested in government securities

Bond Fund is invested in government securities and is a generally safer investment compared to equities and balanced fund. It is considered as the almost risk-free investment instrument. Though its returns aren’t as great as equities, it is more stable and returns does not fluctuate as much.

  • Money Market Fund

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When Do You Need the Money

A big factor in deciding which fund to place your investment in is when you would need to withdraw your money. Investment vehicles, though giving a higher potential return than a savings account, has a risk factor involved. While it is tempting to put all your money in a high-risk, high-return instrument, you might lose a lot when you need to withdraw the money exactly on a year that the market drops.

TIP: If your investment time horizon is more than 20 years, place your investment in a high-risk, high-potential return instrument. The long time horizon gives you the luxury to wait and weather the storm when the market corrects, and gives you an option to stay in the market when potential growth is still high.

Age Bracket

A younger age bracket is more suitable to place their investments in an Equity Fund. Why? They have the luxury of time. More time to work and create active income without the need to redeem their investments. More time to wait for their investment to grow. If the market corrects, they have more time to wait for the market to bounce back.

Those who are in their 40’s and 50’s start to feel the need to place their investments in a more secure fund. Some of which choose Balanced Fund or Bond Fund because it is generally more safer compared to equities.

Risk Tolerance

How much of a temporary decline (ex. one year dip in the market) in the value of your investment can you tolerate?

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Your risk appetite and tolerance is a key factor on which fund might suit you. Those who cannot tolerate any kind of decline in their fund are not suggested to enter the world of investing. I suggest to stick to Money Market Fund or a savings and Time Deposit Account.

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Want to open a Mutual Fund Account?

Do you want to open a mutual fund account? No time to monitor the market every hour and minute of the day? Would you prefer having professionals handle your funds?
If you want a more personal approach and evaluation of your investment risk tolerance: ASK US HOW

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