With interest rates for bank deposits lower than 1%, the average Filipino looking for investment options to grow their money are looking for other alternatives. The most popular choices come from securities, managed funds, government savings programs, bank products, and trading. The majority of Filipinos rely on the 30 Philippine-based companies which make up the Philippine Stock Exchange Index (PSEI) as alternatives. However, limiting the investment options to the local equity/market funds historically yields smaller returns compared to other markets.
For those looking for potentially high returns, some experts would recommend diversifying their portfolio. If you are on the fence about investing in foreign stocks or are thinking of doing so, here are some reasons why you should consider investing globally.
When building your portfolio, it is always best not to put all your eggs in one basket: which in this case means not to put all your investments in the local Philippine market. This increases the ability to diversify risk by allocating across regions and asset classes thereby reducing local market concentration. In the long run, you may just find higher returns than if you have invested your savings all in one place locally.
Higher Investment Returns
One of the problems of limiting your investments locally is the comparatively smaller returns seen since 2015 when compared to other markets. While there is always a risk to be expected when investing in the stock market, investing globally gives investors the opportunities to enhance returns by tapping into global trends (eg: digitalization, advances in the medical field, and robotics).
A Well-Balanced Portfolio
Both local and international markets will inevitably vary— therefore it is worth looking into dividing your portfolio between both international and domestic equities. That way, whenever international markets start to rise, you can still expect good returns especially when the Philippine market underperforms.
AIA Philam Life has now introduced a global fund range available through its variable insurance products Family Provider and MoneyWorks. Called AIA Philam Life Elite Funds, these were developed in collaboration with AIA Investment Management Pte. Ltd. (AIA IM), its Singapore-based affiliate which serves as the hub for regional investment management of AIA Group, AIA Philam Life’s Hong Kong-based parent company.
“AIA IM’s partnership with AIA Philam Life gives Filipinos access to global portfolios managed by best-in-class fund managers that can help them grow their money for long-term investments,” said Shrikant Bhat, AIA IM Head of Funds. “With our team of experienced investment professionals, the Elite Funds combine various strategies to match client risk profiles and focus on delivering long-term investment returns so that our clients can expect reassurance and consistency with their investments.”
“By providing our clients with global investment options, we are helping Filipino investors grow their wealth and achieve their long-term savings goal. With this, we are able to bring our brand purpose to life by helping Filipinos live Healthier, Longer and Better Lives,” says Arleen Guevara, AIA Philam Life Chief Investment Officer.