BPI-managed fund more bullish on stocks over bonds

BANK of the Philippine Islands (BPI)-managed ALFM Mutual Funds is betting on equities rather than fixed-income instruments as it looks to continue to bulk up investments and maintain its lion’s share of the industry.

Sherisa P. Nuesa, president and regular director at ALFM Mutual Funds, said they are more upbeat on the Philippine stock market as a high-yielding investment platform compared to bond placements. “I think the stock market has performed quite well, precisely because of expectations that our GDP ( gross domestic product) will continue to grow,” she said in a recent interview.

“I think we can still continue to invest in the stock market, but it has to be selective... If you select good companies, you know they will grow.”

ALFM Mutual Funds manages about 40% of the P266 billion of pooled investments in the country as of end-May, Ms. Nuesa said.

The Ayala-led BPI administers the placements, which are divided across six investment platforms: bond funds in the peso, dollar, and euro; a money market fund; a growth fund which balances equities and bond placements; and the Philippine stock index fund.

Ms. Nuesa said ALFM currently favors consumer, banking, and property firms, but noted that they prefer “selective” stockpicking as its investment style remains fairly “conservative.”

She noted that higher global interest rates has challenged bond prices, making equities a more option for investing despite being relatively expensive by 1819 times more in terms of priceto-earnings (PE) ratio.

“I think also the fact that we’re relatively small market, global funds would also want to have a slice of the Philippine stock market so that’s why I would think there’s still room for growth and to make some gains in the market even in this relatively expensive market PE-wise,” the ALFM executive added.

Corporate earnings remain fairly “respectable” and is seen to fuel further gains in the domestic stock market, Ms. Nuesa said.

Asked about the company’s plans to maintain its slice of the market, Ms. Nuesa said they are banking on attracting more retail clients to bet on mutual fund instruments given that penetration has been “very low.”

“We are looking at widening our markets by tapping OFWs (overseas Filipino workers) and others that we think are not fully aware of the potential of the mutual funds industry, considering that they are also looking for outlets for their savings,” the company official said, adding that the fund manager will also embark on stronger marketing programs and financial education to get more investors aboard.