MSCI-indexed PH consumer fund launched
The First Metro group rolled out on Wednesday a new mutual fund that allows long-term investors to bet on the Philippine consumer growth story by investing in a pool of companies based on MSCI-derived index.
First Metro Asset Management Inc. (FAMI)’s newest fund, First Metro Consumer Fund, tracks the performance of the First Metro Index on MSCI Philippines Investable Market Indexes (IMI), which was developed in partnership with global index solutions provider MSCI Inc. and launched in 2017.
For a minimum participation of P5,000, FAMI president Augusto Cosio Jr. said investors could own part of a basket of stocks that draws its relevance from the consumer-driven Philippine economy.
“We are choosing from the universe that matters,” Cosio said in a press briefing.
The new fund is a sub-set of the MSCI IMI basket which currently includes 43 companies that account for 99 percent of the market capitalization of the Philippine Stock Exchange.
The newly-launched fund currently includes 21 companies with huge revenue exposure to industries that benefit from the Philippine family consumption expenditure pattern, such as food and beverage manufacturing/processing, fastfood and restaurants, mall development, communications, financial services, tourism and transportation.
These companies, arranged based on MSCI methodology-based weighting, are the following: SM Prime Holdings Inc., Ayala Land Inc., BDO Unibank, SM Investments, Ayala Corp., Universal Robina Corp., PLDT, Jollibee Foods Corp., GT Capital Holdings., Metro Pacific Investments, Bank of the Philippine Islands, Manila Electric Co., Metropolitan Bank & Trust Co., Globe Telecom, Security Bank Corp., Megaworld Corp., Robinsons Land Corp., D&L Industries, Cebu Air, Century Pacific Food, and, East West Bank.
“The First Metro Index, which we created with MSCI, Inc., is meant to help Filipino investors multiply their investments with the guidance of a benchmark that captures the Philippine consumption-led growth story. With the rollout of the First Metro Consumer Fund, they now have a tangible investment product to go to where they can benefit from the superior returns brought about by the robust Filipino household expenditure pattern,” Cosio said.
Back-testing the consumer index based on actual performance of component companies in the last 10 years, straight-line return was estimated at 454 percent, outperforming the Philippine Stock Exchange index (PSEi) return of 296 percent and MSCI IMI’s return of 119 percent.
For 2017 alone, the First Metro Index registered a 27.5-percent increase compared to the 25.11-percent return of the PSEi.
Cosio added: “The economic growth we’ve been experiencing relies heavily on consumer spending, which makes up about 74 percent of the Philippine GDP (gross domestic product). Investing in the First Metro Consumer Fund is essentially investing in that major driver of our country’s growth. What will support this consumption-led growth is our very young population, or what we call our ‘demographic dividend’, who have high disposable income. With the implementation of the Tax Reform for Acceleration and Inclusion (TRAIN) Law, salaried workers receive even more take-home pay which means more spending power for the Filipino consumers.”
Besides its high growth potential, the First Metro Consumer Fund pitches broad market exposure, low operating expenses, and low portfolio turnover.
The launch of this index-based fund rides on the idea of passive investing, in which there’s no need for any manager to do active stock-picking because the fund only has to mirror the composition and respective weights prescribed by an index. This type of investing has been gaining popularity among individuals, institutions, and financial advisers worldwide due to the superior return and greater portfolio efficiency of passively-managed funds.
