As the current situation evolves, we are here to help you navigate extraordinary market challenges.
During a recent Market Outlook webcast with Mr. Edser Trinidad, FVP and Head of Investment and Research, he discussed about the views and strategies during COVID-19. Our clients sent in their questions and here are the answers to help you stay ahead.
What are the pros and cons in investing in index funds given current shutdowns of different work sectors?
- Low transaction cost as they enjoy lower management fees compared to an actively-managed fund,
- Ease in monitoring as it follows the performance of the index; it is designed to follow the chosen index, and
- Stable return over the long-period of time.
- Potential higher losses during bear market as compared to an actively-managed fund, since it has no flexibility in investment strategy unlike an actively-managed fund where the fund manager can decide to limit its exposure to minimize losses.
- During the bull market, index fund cannot also enjoy big gains as compared to an actively-managed fund.
What is the strategy of FAMI Fund managers to cushion the downtrend of the market?
We have lowered our equity allocation and have been selective on where to invest.
Is it a good time to invest?
Yes. We believe we have already reached the bottom. While we do not discount the possibility of the market to remain volatile, it is best to buy during market dips and invest by “averaging”.
Where does FAMI invest our shares?
We only invest in companies with strong fundamentals. Those that enjoy leading market positions in their respective markets, and we also look at their current valuation vis-à-vis their historic values.
Any forecast on when we can all go back to our normal lives & transactions?
This is the new norm until a cure is discovered. Nevertheless, we look at the companies on how they would adapt on this new environment.
What is FAMI’s year-end market forecast?
We are looking at the market to be within 6800 to 7000 for the rest of 2020.
You can find useful resources to help you navigate your investment goals at www.fami.com.ph.