Sunday, July 20, 2014

Philippine Index Funds Part 1: BPI

In he previous post we took a look at index funds: what they are and their pros and cons.  There are a number of index funds available to Filipino investors.  Let's start with BPI's offerings.

First up is a bond index fund: the ABF Philippines Bond Index Fund. This is a bit different from the examples in the last post in that it tracks a bond index instead of an equity index. It tracks the iBoxx Philippines Index.  Here's the key information as of the time of writing:

ABF Philippines Bond Index Fund
Fund Type: UITF
Index Tracked:  iBoxx Philippines Index
Minimum Initial Investment: P10000
Minimum Transaction: P1000
Minimum Holding Period: None
Annual Fee: ~ 0.349%
Tracking Error (from June 2012):  ~ 0.2%

Explanatory Memo
Performance Report for June 2014

The fees and tracking error are quite low, which is a good thing.


Next is an equity index fund:

BPI Philippine Equity Index Fund
Fund Type: UITF
Index Tracked:  Philippine Stock Exchange Index
Minimum Initial Investment: P10000
Minimum Transaction: P1000
Minimum Holding Period: None
Annual Fee: ~ 1.5%
Tracking Error (from June 2012):  ~ 2.27%

Explanatory Memo
Performance Report for June 2014

The fee isn't as low as what I'd expect of an index fund.  The tracking error is much higher than that of the bond index fund above, but I'm not sure if it's too high or okay.


Next is another equity index fund, the ALFM Philippine Stock Index Fund.  This differs from the other equity fund in that it is a mutual fund managed by BPI Investment Management Inc., a subsidiary of BPI.  As such it is regulated under the SEC instead of the BSP.

ALFM Philippine Stock Index Fund
Fund Type: MF
Index Tracked:  Philippine Stock Exchange Index
Minimum Initial Investment: P5000
Minimum Transaction: P1000
Minimum Holding Period: 180 days
Annual Fee: ~ 1.5%
Early Redemption Fee: 1% of the redemption amount
Tracking Error (from June 2012):  ~ 0.88%

Prospectus
Performance Report for June 2014

I'm not a big fan of minimum holding periods and early exit fees but 180 days is short compared to some mutual funds.  Invest only if you have an emergency fund already setup.  The annual fee is comparable to the other equity index fund above, but the tracking error is much better.


Lastly there's the Philippine Dollar Bond Index fund:

Philippine Dollar Bond Index Fund
Fund Type: UITF
Index Tracked:  JP Morgan Asia Credit Index – Philippines
Minimum Initial Investment: $500
Minimum Transaction: $200
Minimum Holding Period: None
Annual Fee: ~ 0.267%
Tracking Error (3-year):  ~ 1.06%

Explanatory Memo
Performance Report for June 2014

The investment and transaction amounts required are pretty high.  The fees are quite low and the tracking error isn't that bad.

That's all for BPI.  Next on the index fund list is Philequity and First Metro.

 

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