Investing 101 : What are Mutual Funds?

What is a Mutual Fund?

A mutual fund is a type of investment fund that pools money from many different investors or corporations to purchase securities. It is professionally-managed by experts called Fund Managers and investing in one can allow you to have diversified diversified portfolios of stocks, bonds or money markets. It is the indirect way of investing in these securities.

What are the benefits of investing in a mutual fund?

Mutual funds are actively managed by Fund Managers. They closely monitor the stocks and bonds in the mutual fund’s portfolio. They are hired by Asset Management companies to devote considerably more time to select the investments and make investor’s money grow. Hence, when you invest in a Mutual Fund, you know longer have to worry about which security to buy or sell or analyzing the financial statements; the fund managers already do that for you.

Aside from that, mutual funds are fairly low-risk, high-reward type of investment. That is because mutual funds often offer diverse portfolios with a collective pool of money; hence, the individual risk to each investor is reduced unlike buying or selling stocks directly.

What are the types of Mutual Funds?


Equity Funds invests primarily in stocks. They  have the highest risk among all Mutual Funds but they could give the highest returns.These are suitable for you if you are an aggressive or growth-oriented type of investor  who seeks capital appreciation and fully accepts volatility to ensure higher returns over the long term.


Index Funds invests primarily in Top 30 corporations of the Philippines. The funds  basically mirrors the performance of the Philippine Stock Exchange Index (PSEi). These are also suitable for highly aggressive investors who have a high appetite for risk and willing to invest for the long-term.



Balanced Funds are invested in mixed equities (stocks) and debt instruments (bonds). These are suitable for those who want the balance of capital growth and protection and who are moderate risk-takers.


Bond Funds invests your money in high quality government or corporate debt issued by the Philippine government and prime Philippine companies. These are suitable for conservative investors who seek capital preservation as safely as possible. They could give potentially modest returns from your investments and higher income compared to time deposits.


Money Market Funds offers the least risk amongst all funds. However, they provide the lowest possible returns. They are for you if you are a conservative type of investor who want to potentially earn better returns on your money than regular current, savings, or time deposits.

Why Should You Invest in Mutual Funds?

Mutual funds are a great way to maximize your money’s earning potential. They will give you higher earnings than bank savings account and time deposits.

You don’t need to be knowledgeable in stock market trading. You don’t need to devote a lot of time.You only need to put your money in, and the fund managers will do all the work for you.

Here are My Wise Finances, we highly encourage you to open a mutual fund account to make your money work for you – earn passively. The money you invested today can appreciate in value and can become millions in the long run.

How to Invest in Mutual Funds?

At Sun Life Asset Management company, the minimum investment for a Mutual Fund is only 1,000 pesos and the minimum additional investment is also 1,000 pesos. You may open an account by directly going to the Asset Management companies or through a licensed investment solicitor.

Learn more about Mutual Funds from this short video:

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