Financial services provider Sun Life of Canada (Philippines) Inc. on Monday urged investors to continue investing in Philippine stocks as better economic prospects and earnings guidance point to a market rebound in the second half.
Sun Life is confident that the country will outperform its regional peers this year, noting the government’s GDP growth forecast of 6.5 percent to 7.5 percent for 2014.
“As such, we advise our investors to stay the course and take advantage of equity market sell-offs as an opportunity to increase investment exposure—especially for those who have no exposure in our equity markets yet,” Sun Life Chief Investments Officer Michael Enriquez said.
He said the second half of 2014 is promising as rehabilitation efforts in areas affected by Super Typhoon Yolanda should begin to reflect improvement in the country’s economic activity.
“More government infrastructure projects will start construction activities; a new casino is expected to bring more jobs and tourists when it opens in the third quarter; and long awaited investments of companies will be completed and will contribute to earning expansion,” Enriquez added.
He said that the Philippines should remain resilient in the medium to long term, aided by a continuous infrastructure boom and the government’s healthy balance sheet.
“On top of those, we also have a growing young middle class that can sustain domestic consumption. Plus, the expansion of BPOs [business process outsourcing]nationwide and the resurgence of the manufacturing sector can provide a steady and broader job supply,” he explained.
Enriquez explained that the most efficient way to participate in the equity markets is through pooled funds, which offer professional fund management as well as diversification.
As the name suggests, pooled funds come from many individual investors that are aggregated for the purpose of investment, as in the case of a mutual or pension fund.
Investors in pooled funds benefit from economies of scale, which allow for lower trading costs per dollar of investment, diversification and professional money management.
For those who can take the additional equity risk, they should accumulate in tranches to even out the volatility in the market rather than investing heavily at one time, Enriquez said.
Sun Life offers products that provide investors the opportunity to earn from the equities market, such as the equity and balanced funds under the Sun Life Prosperity Funds offered by Sun Life Asset Management Company Inc. It also offers insurance products combined with investment funds, such as the Sun MaxiLink One with allocation in the Opportunity Fund.
However, Enriquez noted that the performance of these products varies and largely depends on the health of the Philippine economy since they are not immune to developments overseas.
The Sun Life executive also emphasized that investing in these products offers no guarantees in terms of returns, and therefore requires a thorough assessment of one’s financial needs and capacity, so it is a must for an investor to seek professional advice before engaging in any investing activity.