Which Equity Fund Is Better?

Finding the best Mutual Fund, UITF invested in stocks
That's the usual question I often encounter when people start investing. Of course, there are several factors that we can look at, when choosing the best fit for us.

But when people ask which is "better", they really mean which is giving better returns. Personally, I'm a firm believer that chasing the one with the highest returns right now isn't necessarily the best strategy. But of course, I wouldn't stick with a mediocre fund for long.

But performance isn't really as simple to gauge as just comparing the yield (or how much the NAVPU has appreciated). Just as different equity funds rise differently in a bull market, they also fall differently in a bear market or even during a correction.

So in this post, we'll see how some of the better-known funds have done since 2013 rolled in.

To add some drama to our number-crunching we'll check their progress before and after the correction this March. Why? Because the most "exciting" times in an equity fund is when it's rising during a bull run and when it's falling during a market correction.

Obviously we would want something that will quickly rises very high during a bull run and hardly falls during a correction. But that's unlikely to happen. So we'll look at some of popular mutual funds and UITFs and see how they did and which performance we're more comfortable with.

Since the correction started roughly on March 11 (first day of 8-straight-trading-days of decline for the PSEi), we'll look at the progress from Jan. 2 (Jan1 was a holiday) up to March 8 (Friday) - the bull run.

And then from March 11 to March 26 - The correction and slight recovery. I wanted to include March 27, but as of Mar. 28 12nn, the data still isn't available for a lot of the funds. Given that it probably won't be available until after the long weekend, I decided to just go ahead and look at the results as of March 26.

Besides, on March 27 the Philippines received an investment grade rating from Fitch Ratings, causing a 2% surge in the PSEi for that trading day. I subjectively think that's not part of a normal recovery anymore and is more of a big boost of adrenaline to our equity market.

Without further ado:


BPI Equity Value Fund (UITF)
Jan. 2 NAVpU:     128.41
Mar. 8 NAVpU:    142.70
Return on Investment:    11.1284 %


BDO Equity Fund (UITF)
Jan. 2 NAVPU:     348.93
Mar. 8 NAVPU:    406.41
Return on Investment:     16.47%


Metro Equity Fund (UITF)
*data from Bloomberg.com
Jan. 2 NAVPU:      2.04
Mar. 8 NAVPU:     2.3609
Return on Investment:  15.73%


PhilEquity Fund (mutual fund)
*data from Bloomberg.com
Jan. 2 NAVPU:     28.8633
Mar. 8 NAVPU:    33.4476
Return on Investment:   15.88%


BPI ALFM Philippine Stock Index Fund
Jan. 2 NAVpS:     647.15
Mar. 8 NAVpS     754.14
Return on Investment:    16.5325 %


First Metro Save & Learn Equity Fund
*data from Bloomberg.com
Jan. 2 NAVPU:     4.8077
Mar. 8 NAVPU:    5.3724
Return on Investment:    11.74%


Jan2-Mar8 Conclusion: BDO's reputation for having the best equity fund is well deserved. It's the runaway winner among UITFs. It did even better than PhilEquity (a mutual fund) and is only slightly beaten by BPI's Index fund - but by a margin so small as to be meaningless in terms of actual money you will be getting upon redemption.


BPI Equity Value Fund (UITF)
Mar. 11 NAVpU:    142.42
Mar. 26 NAVpU:    140.40
Return on Investment:     -1.4183 %


BDO Equity Fund (UITF)
Mar. 11 NAVPU:   407.3098
Mar. 26 NAVPU:   403.3190
Return on Investment:     -0.9798%


Metro Equity Fund (UITF)
*data from Bloomberg.com
Mar. 11 NAVPU:    2.3548
Mar. 26 NAVPU:    2.3201
Return on Investment:    -1.4735%


PhilEquity Fund (mutual fund)
*data from Bloomberg.com
Mar. 11 NAVPU:    33.4541
Mar. 26 NAVPU:    32.7959
Return on Investment:  -1.9674%


BPI ALFM Philippine Stock Index Fund
Mar. 11 NAVpS:   750.91
Mar. 26 NAVpS:   739.52
Return on Investment:    -1.5168 %


First Metro Save & Learn Equity Fund
*data from Bloomberg.com
Mar. 11 NAVPU:   5.4237
Mar. 26 NAVPU:   5.3563
Return on Investment:   -1.2426%


Mar11-Mar26 Conclusion: BDO is just kicking butt at this point. It had the practically highest gain during the 65-day bull run. And in the succeeding 8-day slide and 7 day recovery, it's the one with the lowest loss. The results are so good for BDO, I feel the need to say I have an index fund, I don't have a BDO Equity Fund, and I'm not in anyway affiliated with BDO.


BPI Equity Value Fund (UITF)
Jan. 2 NAVpU:    128.41
Mar. 26 NAVpU:  140.40
Return on Investment:    9.3372%


BDO Equity Fund (UITF)
Jan. 2 NAVPU:   348.93
Mar. 26 NAVPU: 403.3190  
Return on Investment:    15.5873%


Metro Equity Fund (UITF)
*data from Bloomberg.com
Jan. 2 NAVPU:   2.04
Mar. 26 NAVPU: 2.3201   
Return on Investment:     13.7303%


PhilEquity Fund (mutual fund)
*data from Bloomberg.com
Jan. 2 NAVPU:    28.8633
Mar. 26 NAVPU:  32.7959
Return on Investment:    13.6249%


BPI ALFM Philippine Stock Index Fund
Jan. 2 NAVpS:    647.15
Mar. 26 NAVpS:  739.52
Return on Investment:   14.2733%


First Metro Save & Learn Equity Fund
*data from Bloomberg.com
Jan. 2 NAVPU:   4.8077
Mar. 26 NAVPU: 5.3563   
Return on Investment:  11.4108%


Jan2-Mar27 Conclusion: I know it's an exceedingly small sample size, but at this point, there's really no doubt that BDO is outperforming all the other funds this year. And unless they've got high fees that are not factored in the NAVPU (unlikely), it seems like a clear cut choice where to place your money.

Personally, I'm still sticking with an index fund. Why? As I said before, at any given year there's always a fund that can outperform the PSEi. But it's never the same fund. BPI Odyssey funds were doing great a few years ago, but have been so lackluster the past year that I didn't even want to include them here and opted to instead show the mediocre BPI Equity Value fund. BDO looks great now, but I'd rather not have to bet that it won't perform like the odyssey funds 5 or 7 years from now.

I've got over 30 years before I retire. If it were a point-system race (and it kind of is, if you think about it) I'd rather place a close second all 30+ years than finish first in some, but fall third or worse the rest of the way.

But of course, everyone's goals and situations are different. And I've heard that PhilEquity has been outperforming the PSEi for decades. So who knows, maybe BDO will be doing the same?

What about you, which equity fund do you have? Or which one are you thinking of investing in?


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20 comments:

  1. Im on bpi index fund (mutual). :-) but only a small amount. I think im too diversified with a huge chunk still on savings. :-(

    ReplyDelete
    Replies
    1. I'm on the same fund! :D

      Well, it really depends on your goals - and opportunity to open accounts here in the Philippines, I guess.

      If you've got a lot of near-term goals, a savings account isn't a bad idea.

      I actually think someone can be too diversified, but you're the only one who an say for sure if you really are.

      Delete
  2. why is Unionbank's Large cap not included?
    did it perform below par this Q1?

    ReplyDelete
    Replies
    1. Hi Anonymous,

      I did not include that fund because their performance information is very tricky. To explain better what I mean, here's an excerpt from millionareacts.com

      "when you invest in the fund, the ‘offer’ NAVPU will be used. When you redeem your units, the ‘bid’ NAVPU will be used. They have high OFFER NAVPU and lower BID NAVPU. Higher ‘Offer NAVPU’ means less units to be bought while lower ‘BID NAVPU’ also means lesser gains for the investor. What’s interesting is, the difference between their OFFER and BID NAVPUs is huge and Union Bank is earning a lot from the spread cost!"

      And given that, in the same article, they had the "best" performance yet do not have such a reputation preceding them, I was worried the returns are calculated differently. And since I didn't know exactly how, and don't want to mislead readers, I just left them out. But to be fair I left a lot of funds out. I only dealt with some of the most well-known.

      Delete
    2. http://www.millionaireacts.com/2900/uitfs-and-mutual-funds-a-closer-look.html

      Delete
  3. Hey Carlos, thanks for including my blog as a resource :)

    By the way, to answer your question, I am invested in both BPI Equity Value Fund and BPI Philippine Stock Index Fund. BPI Equity Value Fund has been performing well since they reorganized their top stocks last March. I've been monitoring it daily through my Bloomberg app in my blackberry and most of the time this April, it beats the rate of increase of the index fund.

    I am a fan of BPI because of their online technology providing so much convenience to their investors. In addition, bulk of my savings are with BPI, so less hassle transferring to other banks. :)

    ReplyDelete
    Replies
    1. Hi Tyrone!

      No problem; you're blog post was very informative!

      Unfortunately both aren't available for additional or new subscriptions right now. I hope BPI fixes it soon, it's been over a month now.

      I'm also a fan of how they made banking so convenient.

      Delete
    2. Hi Carlos,

      BPI Equity Value Fund is available for new and additional subscriptions. It's only the index fund that is not yet available.

      I really hope they can open it already. I followed up with BPI and they said it normally takes 6 months for SEC to grant them additional authorized capital. And they applied last year pa.

      Delete
    3. Oops. Yes, you're right. I forgot that uitfs and MFs were listed separately; I was only looking at MFs so that's why I didn't see the equity value fund.

      Thanks for the heads up on the 6-months timeline! I was wondering when they would open it up again. So I guess around June right?

      Delete
  4. Thanks for that input on UnionBank.

    But why does not UnionBank come out with their version of the truth?

    Maybe it does not even know that everyone is talking about its tricky information.

    So, is that enough ground to suspect that others are also into tricky information feed into Bloomberg?

    Can you do some investigation into how honest are funds operators or dishonest or tricky?

    But I notice that funds operators don't talk against each other unlike politicians, it must be their code of mutual silence.

    Is there some kind of citizen volunteer public watch-dog to keep us ordinary folks in the dark enlightened, about at least the more garapal tricksters funds operators, so that we will be guided accordingly where to put our hard earned money?



    Odrareg

    ReplyDelete
    Replies
    1. Hi Odrareg,

      Actually the fund gives the info as well. It's there if we care to read it. My main hesitation is that it is not directly comparable with the other funds because of this extra layer of computation.

      Also, I don;t think they're dishonest. Based on some further snooping, the BID/ASK discrepancy may just be another form of back-end sales load.

      Delete
  5. Sir, I think Unionbank Large Cap UITF has performed the best among all UITF's even assuming there is an issue with the "extra layer of computation". Which UITF can come close to their 5 year return of 35%? BDO is just 24% and BPI is just 16%. As for MF's it would be Philequity's Equity Fund and it's 5 year return of 24%. Overall, no one, not even the index has beaten Philequity's 20 year return of 20%.

    In most books, people are advised to stick to index funds. However, that might only apply to the US because Philequity has proven that it can actually get a better result.

    ReplyDelete
  6. I just want to ask you for your opinion, as I am myself even less than you when it comes to experience on how to make money from funds.

    Recently having started some equity funds in Bpi and not touching them for two years and a half, I learned about selling high and buying low: when the navp is high, sell! when it's low, buy!

    This is what I might call profit taking with funds.

    There were two times when my equity funds with Bpi had high navps, but I did not do any redemption of the funds

    Had I redeemed them I could have profited as much as over 20% of the original cash I put in them, then waited for their navps to dive low, and buy the shares back, to wait for the next high peaks.

    In this manner I will gain good cash in hand which cannot go down anymore, while when I don't redeem them, their gain on paper does go down eventually, of course in the long term the direction upward.

    Tell me what you think of my idea.

    ReplyDelete
    Replies
    1. That's a good strategy. Just be careful and diligent.

      It's always difficult to know when the peak and bottom is happening. Especially the peak. You'll have to stay glued to charts, news and other info.

      But if you have the time, patience, and discipline it's a good strategy.

      Delete
  7. Hello there. Sorry if my question is cliche. I am really torn between bpi and bdo when it comes.to ewuity funds and equity index funds. What can you suggest? I just want to invest to the bank that offers higher market value return.

    ReplyDelete
    Replies
    1. Hi anonymous,

      That's a pretty common question. I can make a suggestion, but it's best if you decide for yourself.

      From what I know, you should probably go with BDO.

      But it's easy to decide for yourself. Just look up their returns over the last 5 years. It's available on their own websites. Or look up pifa or uitf.Com

      Delete
    2. Hi anonymous,

      That's a pretty common question. I can make a suggestion, but it's best if you decide for yourself.

      From what I know, you should probably go with BDO.

      But it's easy to decide for yourself. Just look up their returns over the last 5 years. It's available on their own websites. Or look up pifa or uitf.Com

      Delete
    3. Hi anonymous,

      That's a pretty common question. I can make a suggestion, but it's best if you decide for yourself.

      From what I know, you should probably go with BDO.

      But it's easy to decide for yourself. Just look up their returns over the last 5 years. It's available on their own websites. Or look up pifa or uitf.Com

      Delete
  8. Hello sir ... i am a new to investing . Is it still ok for me to continue my investment posted just this month in BPI high dividend equity fund ? or is it ok for me to wait for 3 to 5 years ?
    tnx

    ReplyDelete
    Replies
    1. Hi juanernesto1987,

      It really depends on your goal.

      Off the bat though, I will say this: It's said that we are now in a bear market. Prices aren't expected to get much higher, and will probably get lower. If you are looking for quick gains, better to not get into the stock market right now. That said, now is the perfect time to start a stock/equity investment. We may not be at "bottom" but even a simple cost-averaging strategy can give you great profits after several years.

      But it all depends on your goals. If it's to buy an iphone by christmas or send kids to school in 2 years, don't start right now. If it's for retirement in 40 years, college tuition in 20 years, downpayment for a house in 10 years, or even for an out of the country trip in 5 years, go ahead an keep investing.

      Delete