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Which Investment Funds Are (Still) Posting Returns Above the 4.5% Inflation Rate?

The vast majority of funds are not rising as fast as consumer prices; here’s a list of the exceptional few that do
By Pauline Macaraeg |


Rising inflation, or the faster pace of increase in consumer prices, is not only the enemy of consumers but is also the scourge of savers and investors.


While higher inflation implies goods and services are costlier for consumers, it also erodes the value of savings and investments. The purchasing power of money set aside over time turns out be lesser than the original value of the investment, making the act of saving less compelling.



No wonder, many investors are worried when the country’s inflation rate soared to 4.5 percent in April compared to the annual average of only 3.2 percent in 2017 and 1.8 percent in 2016. The latest inflation reading was well above the Bangko Sentral ng Pilipinas (BSP)’s target ceiling of four percent.


The inflation surge came as investment returns were softening due to the steady decline in local share prices since the start of the year, making it harder for investors and fund managers to post returns above the elevated inflation rates.


Indeed, only eight percent of more than 200 mutual funds and unit investment trust funds (UITFs) in the country reported year-on-year returns in early May that beat the 4.5 percent inflation rate in April, based on a review of fund performance done by Entrepreneur Philippines.


That means the remainder, or 92 percent, posted returns below the inflation rate. Worse, about half, or 48 percent, reported negative returns from the year before, a sign of the tough investment climate.



As of May 4, 2018, there were 54 active mutual finds listed by the Philippine Investment Funds Association but only five of these have yields higher than 4.5 percent.


As well, out of the 151 UITFs listed by the Trust Officers Association of the Philippines (TOAP) as of May 3, 2018, only 12 funds have returns over 4.5 percent. The TOAP reports the performance of the funds in its website,


Interestingly, out of the 17 UITFs and mutual funds that posted return above the inflation rate, only two are invested in Philippine securities. The remaining 15 are either primarily invested in foreign securities or require investment in foreign currency, mainly US dollars.


The difference in the performance of the Philippine Stock Exchange index (PSEi) and the Dow Jones Industrial Average may explain the stark contrast between the performance of funds invested in foreign securities and those that are invested in the local securities. While the Dow Jones increased by 19 percent in early May from a year ago, the PSEi declined by four percent in the same period.



The fund that has the highest year-on-year return is BDO Unibank’s BDO China Equity Feeder Fund. It is a UITF that has a total asset size of $7.1 million primarily invested in “equities and equity-related instruments of China-related companies traded both onshore and offshore China.” As of early May, its year-on-year return stood at 33.05 percent.


Among mutual funds, ATR Asset Management’s ATRAM AsiaPlus Equity Fund, Inc. has the highest yield at 14.25 percent. It also requires investment in US dollars and has a total asset size of $0.99 million.


Related story: Why the Surge in Inflation Rate to a 39-Month High of 4% in January is Bad News for Your Savings





Pauline Macaraeg is Entrepreneur PH's data journalist

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