Key Takeaways
To invest in mutual funds in the Philippines, you pool money with others for professional management, enabling risk diversification and wealth growth through compounding.
- Mutual funds are accessible to beginners with low starting capital.
- Choose a fund based on your risk tolerance: Equity (high risk) or Bond (stable).
- Open an account with a licensed provider like UTrade.
- You can typically start investing with as little as PhP 1,000.
Do you ever feel like your hard-earned money isn’t growing as fast as you’d like? Many Filipino employees share this sentiment, eager to build their savings but unsure where to begin their investment journey.
Perhaps you’ve heard about mutual funds but think they’re only for the wealthy or those with a finance degree. It’s a common misconception, but the truth is that mutual funds are beginner-friendly and don’t require a substantial sum to get started.
This article is your guide on how to invest in mutual funds in the Philippines—designed for everyday Filipinos, not just finance experts.
What is a Mutual Fund?
A mutual fund is a shared investment vehicle where multiple investors contribute their money into a single pool. This pooled capital is then managed by professional fund managers, who allocate it across a broad mix of investments, including stocks, bonds, and other assets, to create a well-diversified portfolio.
Investing in a mutual fund enables you to buy shares of professionally managed portfolios. This setup is ideal if you’re a beginner because you don’t need to pick individual stocks yourself. The fund managers handle all the research and decision-making for you, aiming to grow your income into lasting wealth.
As mentioned, mutual fund investments promote diversification. That means your money isn’t tied to just one company or asset. Instead, it’s spread across different investments. If one underperforms, others can help balance that impact and reduce your overall risk.
Over time, thanks to the power of compounding, your initial investment can grow significantly since your returns start earning returns of their own. The earlier you invest, the more time compounding has to work in your favor.
What are Types of Mutual Funds to Invest In
Knowing the different types of mutual funds is essential when choosing one that matches your financial objectives and risk tolerance. Here’s a quick overview:
Equity funds – Higher risk, higher return
These funds primarily invest in stocks of various companies. They typically offer the highest potential for returns but also come with higher risk. If you have a long-term investment horizon, such as for retirement, and are comfortable with market fluctuations, an equity fund may be suitable for you.
Bond funds – Lower risk, more stable returns
As the name suggests, these funds primarily invest in bonds, which are debt instruments issued by corporations or governments. Compared to equity funds, they tend to carry less risk and provide steadier returns over time. If your goal is to preserve capital while achieving modest growth with minimal ups and downs, a bond fund may be a viable option.
Balanced funds – A mix of both
These funds offer a diversified mix of stocks and bonds, allowing you to benefit from both growth and income. They also strike a balance between risk and reward. If you’re looking for moderate growth with less volatility than a pure equity fund, a balanced fund offers a middle-ground approach—ideal for medium-term goals.
Money market funds – Short-term, conservative
These are the most conservative types of mutual funds, investing in short-term, highly liquid assets such as time deposits and treasury bills. They are designed for capital preservation and offer very stable, albeit lower, returns.
If you need a safe place to park your money for a very short period—perhaps you’re setting aside an emergency fund or waiting for a bigger investment move—a money market fund is a good choice. Plus, they typically offer easy withdrawal with minimal risk.
How to Open a Mutual Fund Account in the Philippines
Getting into mutual funds is a straightforward process. Here’s how to open a mutual fund account in the Philippines:
Choose a licensed provider
The first crucial step is to select a licensed and regulated mutual fund provider or distributor in the Philippines. You want to ensure your investments are safe and handled by a reputable institution. One such distributor is Unicapital Securities, Inc. (of the Unicapital Group) a leading brokerage house duly licensed by the Securities and Exchange Commission and is a member of the Philippine Stock Exchange.
USI offers a range of mutual fund options through its online platform, UTrade.
UTrade gives you access to real-time market data, customizable trading tools, and in-house research to support informed decision-making. It also offers features such as a stock investment program (SIP) for peso-cost averaging, as well as educational seminars to deepen your understanding of investing.
Submit KYC documents
“KYC” stands for “Know Your Customer.” This is a standard process that requires you to provide identification documents, which typically include at least one valid government-issued ID (such as a passport, driver’s license, or SSS/GSIS ID) and proof of your current address (such as a utility bill or bank statement). You can complete the process fully online through UTrade’s improved Digital Know Your Customer (DKYC) system—no need for in-person visits!
Fill out an investor risk profile
The investor risk profile is a short questionnaire designed to understand your financial situation, investment goals, and most importantly, your risk tolerance. First-time investors will be prompted to answer a quick questionnaire to assess investment goals and risk tolerance. Based on your responses, UTrade will suggest mutual funds that match your profile. You’re free to explore all available funds using the platform’s filter and sort functions.
Fund your account
Once the institution processes your application, you’ll need to make your initial investment. The minimum funding requirement is ₱10,000, but you can start for as low as ₱5,000 (or even ₱1,000 if you’re a student) by attending UTrade webinars or special events. This initial investment can then be used to invest in mutual funds or stocks. You can start investing in mutual funds with as little as ₱1,000. . You can typically fund your account through bank transfers, online payment platforms, or over-the-counter deposits.
Start investing based on your risk appetite
With your account funded, you can now start investing! Your provider will guide you in selecting specific mutual funds that best match your financial goals and risk tolerance, whether you’re aiming for long-term growth or more stable returns.
Planting Seeds to Blooming Wealth
Mutual funds offer an easy and affordable way for everyday Filipinos like you to start investing and grow your money. You don’t need a large sum of money to begin, just the proper guidance and a commitment to your financial future.
By understanding how mutual funds in the Philippines work, the various types available, and the process of opening an account, you’re already taking a significant step toward securing your financial well-being.
Ready to take the first step in growing your wealth? Open your mutual fund account with Unicapital today! Visit our website to learn more.
Frequently Asked Questions (FAQs)
A mutual fund is a shared investment vehicle where money from many investors is pooled together. This capital is then managed by finance professionals who invest it across a broad, diversified mix of stocks and bonds.
Mutual funds are ideal for beginners because the investments are professionally managed, removing the need to pick individual stocks. They also promote diversification, which helps balance risk and smooth out market fluctuations.
The four main types are Equity Funds (highest risk/return, focused on stocks), Bond Funds (lower risk, stable returns), Balanced Funds (a stock/bond mix), and Money Market Funds (most conservative, short-term assets).
While the general minimum funding requirement may be higher, you can usually start investing in mutual funds in the Philippines with an initial investment as low as PhP 1,000. This makes them very accessible.
You must fill out an investor risk profile questionnaire when opening your account. This short assessment determines your financial goals and risk tolerance, guiding your provider to suggest mutual funds that match your specific profile.
