SUMMARY
This is AI generated summarization, which may have errors. For context, always refer to the full article.
“You win some, you lose some,” so they say. Such is life with investments.
I will bet that some of you made a lot of money in some picks while some did not: some took profits, while some took losses.
As the year 2014 comes to a close, we look back as investors and think of the different investment instruments that we went into, and those we did not.
Reviewing our investments is an integral part of our finances. We ask questions like: “What made good returns? What did not? What were the successes? What are the failures?”
Because the market and the economy are always changing, our investments, too, should adapt.
Some assumptions might have materialized, while some may not; some events that have been forecasted may have happened, while some events might have surprised.
Nonetheless, all have affected our investments, one way or the other.
But what are the investments that performed well in 2014?
Read on the winners1, broken down into major asset classes.
The Philippine stock market
The stock market is one of the major destination for funds that want to grow. As of this writing2, the following are the biggest gainers (percent reflects change as of date):
- Island Information & Technology, Inc (IS) – 1934.48%
- Leisure & Resorts World Corporation Warrants (LRW) – 958.00%
- Premium Leisure Corporation (PLC) – 666.67%
- Central Azucarera de Tarlac, Inc (CAT) – 634.82%
- iRipple, Inc. (RPL) – 409.09%
- Integrated Micro-Electronics, Inc (IMI) – 186.00%
- Southeast Asia Cement Holdings, Inc (CMT) – 179.38%
- Nickel Asia Corporation (NIKL) – 175.00%
- Macay Holdings, Inc (MACAY) – 163.80%
- D & L Industries, Inc (DNL) – 157.78%
Though some issues would be relatively hard to buy into as they are illiquid, these companies warrant a closer look given their performance.
Some would be attributed to good business revenues in the case of Integrated Microelectronics; while some, like Nickel Asia benefitted from the demand of nickel in the international market.
More information about these companies are available on the PSE website.
Mutual funds
Hands down, the winners are the equity/stock funds, with 2014 being another banner year for equities.
The following are the top 5 fund performers to date (and their corresponding year-to-date return):
- ATRKE Alpha Opportunity Fund, Inc.2 – 30.88%
- Philequity Dividend Yield Fund, Inc.3 – 28.30%
- Philequity Fund, Inc2 – 26.51%
- Philippine Stock Index Fund Corp.2 – 22.33%
- Philequity PSE Index Fund Inc.2 – 21.39%
Also noteworthy is the country’s only Exchange Traded Fund or “ETF,” which registered a 23.07%4 return.
Sadly, bond funds and the bond market in general lagged in 2014, mainly due to the rising interest rate environment both globally and locally.
The US economy also affected the fixed income market: with the improving economy, the US Federal Reserve decided to taper its quantitative easing program, and with that, interest rates practically moved up.
On the domestic front, concerns on inflation with the Bangko Sentral ng Pilipinas hiking key rates by 0.50% also added to the muted bond performance.
Thus for 2014, returns have been unspectacular with bond funds, only hovering from 0.56% to 4.51%.
On a lighter note, dollar-denominated bond funds have done better compared to their peso-denominated cousins, with returns ranging from -1.49% to 9.42%.
Unit Investment Trust Funds (UITF)
Similar to mutual funds, UITF is also a type of pooled investment. Stock/Equity UITFs are also the winners in the UITF category, outstripping the balanced and bond/fixed income funds in terms of returns5.
The following are the top 5 UITFs from banks and their corresponding return on investment:
- Security Bank Corporation (SB PESO EQUITY FUND) – 40.70%
- Philippine National Bank (PNB HIGH DIVIDEND FUND) – 24.55%
- BDO Unibank, Inc (BDO SUSTAINABLE DIVIDEND FUND) – 22.29%
- Philippine National Bank (AUP EQUITY FUND) – 21.64%
- Metropolitan Bank & Trust Company (Metro Equity Fund) – 20.33%
Compared to 2013 returns, only SB Peso Equity fund retained its rank among the top 5 Equity UITFs.
Yet historically, no one fund retains the top spot consistently due to changes in the market as well as investment styles and strategies.
Thus, it would be wise for investors to consider the top 25% of the funds when investing. This way, an investor can focus on different fund leaders, instead of focusing on one.
Diversification can also be done among funds so that when one fund loses its standing, others may potentially replace it.
Currencies
Since the foreign exchange (“forex” or “FX”) is the largest market in the world (even larger than the stock or bond market), it has its potential to offer even more gains than the stock market.
Forex expert Sharon Jane Abbasi cites the US dollar as the winner in the currency market for 2014.
To give a feel of its performance, the US Dollar Index – which measures the performance of the dollar versus a basket of major currencies such as the euro, British pound, Japanese yen, and other currencies like the Canadian dollar, Swedish krona, and Swiss franc, have risen 10.41% as of December 12.
Diversification tops
Thus for 2014, a full-equity investment over performed than all other asset portfolios.
As we have seen, some asset classes really have outperformed and outstripped the others for the majority of 2014.
It might be tempting then, moving forward, to push our resources and go into the “winners” in order to ride and maximize the gain.
But, it cannot be overemphasized that diversification should be done by every investor: investing in different instruments so that if some goes down, others can go up and offset those losses. It would be very risky then to invest in assets that tend to rise together as they also tend to go down at once.
Being successful in investing means sticking to your investment goals, matching the instrument to these goals, and be guided by experts who have your needs at the center of it all. – Rappler.com
Disclaimers:
1Due to difference in sources, figures are as of different dates. But by and large, they give a feel of which are the winners
2As of December 10, 2014
3Inception date as of February 7, 2014
4As of July 1, 2014
5As of December 11, 2014
Sources:
Philippine Investment Funds Association
Rienzie is also an accredited investment fiduciary of Pennsylvania-based fi360 and an international member of the Financial Planning Association, the largest association of financial planners in the US. You may reach Rienzie at rienzie.biolena@gmail.com, his Facebook account or Twitter @rbiolena.
All images via Shutterstock
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