WE ALL know this is true: One reason why the rich get richer, so to speak, is because they have access to better investment advice—the kind that is often unavailable to regular investors whose bank account balances don’t go beyond six digits.
So the Inquirer’s Daxim Lucas, Doris Dumlao and contributor Ditas Lopez polled some of the most influential and well-connected bankers and investment managers in the country to get the best advice as to how one should invest a hypothetical P100,000 (an amount small enough to be within the reach of middle-class savers and investors, but large enough to give investors access to a wider array of instruments).
Surprisingly, the results of our discussions with these financial experts showed that investment success was not achieved through secrets known only to the affluent, but on decisions that are mainly … common sense.
For longtime treasurer Roland Avante, fixed-income securities are the
way to go if one had P100,000 lying around waiting to be invested.
Antonio Moncupa Jr.
President
East West Banking Corp.
“An investor with P100,000 to spare should consider investing in an equity-based mutual fund, especially if the money will not likely be needed on short notice.
If it’s really for investment, meaning you don’t expect to use it for any personal consumption needs in the foreseeable future, I would advise to invest it in an equity mutual fund like Philequity Fund, which has been a consistent good performer.
Those who are more risk-averse, however, should place the money in bonds or fixed-income investments. Keep the money in a short-term time deposit, and when the inflation scenario gets clearer, buy retail investors bonds issued by the Bureau of the Treasury.
Too many outside factors could affect inflation and interest rates [at present],” he said. “Let the situation simmer for now.”
Ron Logan
SVP/head of personal financial services
HSBC Philippines
“If a client requires capital protection and guaranteed return, he or she could opt to invest in government securities. FXTNs [Fixed Treasury Notes] are medium-to long-term debt instruments with tenors ranging from two to 25 years.
These securities are unconditional obligations of the Republic of the Philippines and backed by full taxing of the government.”
Pascual Garcia III
President
Philippine Savings Bank
“I would suggest that it (P100,000) be placed in an equity fund at this time, given the decline in stock prices. It’s an opportunity to buy at cheap prices. A bond fund would also be okay, not at this time, but once the Bangko Sentral ng Pilipinas has finished its series of interest rate hikes.”
Lorenzo Tan
President
Rizal Commercial Banking Corp.
“Put it in a balanced fund so you’ll get some equity upside, ride on the rise of the Philippines because during times when there’s a storm coming, the investment managers protect you by moving out of equities to fixed income.”
Roland Avante
Treasurer
Sterling Bank of Asia
“The retail treasury bonds (RTBs) being offered by the government at present are a very attractive investment vehicle. RTBs—just like the more traditional treasury bonds—are government IOUs issued to creditors, with the proceeds going to the state’s coffers to help fund its operations. What makes RTBs unique is that they are available in denominations of as low as P5,000, and are distributed to small investors.
Buy the newly issued 10-year RTBs. The yields are good, plus the investor may actually realize capital gains on this investment when the inflation rate stabilizes.
Given the track record of the central bank in keeping inflation in check, there’s a good chance that RTB investors will gain more than they had initially expected.”
Eugene Acevedo
President and CEO
Philippine National Bank
“A person with P100,000 to invest should put it in Australian dollars.
The Australian dollar is expected to appreciate over the short to medium term because of the growing demand for commodities, which are Australia’s main export.
One should buy Aussie dollars to ride on commodity price increases. They also ride on the growth of the Chinese economy. It (Australian dollar) is proxy for China’s growth.”
(Demand from China for practically all kinds of commodities that Australia produces will bode well for the currency. But the challenge is in finding a local bank that trades in the relatively exotic currency.)
Ador Abrogena
EVP for trust and investment group
Banco de Oro
“Assuming a three-year horizon, you can place it in equity. If you want something you can take out anytime, you place some of your P100,000 in the money market or bond fund and the balance, which you can leave for three years or more, can be placed in an equity fund. With a bond fund, for example, you’re subject to risk but it also takes very short time for you to recover. If net asset value falls, it takes a short time for it to recover. The balanced and equity funds, they take a while to bounce.”
Theresa Marcial-Javier
SVP/head of asset management
Bank of Philippine Islands
“Assuming that the client is moderately aggressive with an investment horizon of five to seven years and the investment objective is balanced (to achieve growth through a balance between interest income and capital gain over the medium term), the P100,000 can be allocated in diversified BPI investment and mutual funds as follow: P15,000 in cash equivalent (BPI short term fund); P52,000 in fixed income fund ALFM peso bond fund; P23,000 in ABF Phils. Bond Index Fund and P10,000 in equities (BPI equity fund).”
Mahendra Gursahani
Philippine CEO
Standard Chartered Bank
“With that amount of savings you want it to be safe and secure so I won’t recommend anything other than putting it in a special deposit account with the central bank which gives you 4 percent interest.”
Allan Yu
Head of investment for Metropolitan Bank and Trust Co.
“I recommend a balanced fund because it offers a more diversified mix of assets. It offers you the long-term growth potential of equities and also the more stable returns of fixed income.”