Peso Cost Averaging in Philequity Fund, Inc



For introduction to cost averaging, please read the post: Easy Investing Strategy in Mutual Funds or UITF. Last time we see how peso-cost averaging can be applied in investing in First Metro Save and Learn Equity Fund (see post here).  This time we will try to use the same investment strategy in Philequity Fund, Inc.

Philequity Fund Inc. or PEFI is a mutual fund managed by Philequity Management, Inc. with primary objective of capital appreciation by investing the fund in selected Philippine stocks.


Fund Facts
Incorporation Date: 21 Feb 1994
Minimum investment: P5,000
Minimum additional investment: P5,000
Sales Load : 3.5% (decreasing percentage as investment amount increases).
Investment period to wave exit fee: 2 years
Early exit fee: 2% if less than 1 year, 1.5% for more than 1 year but less than 2 years.
Annual Management Fee: 1.5% (included already in daily NAVPS).

Now we will see if using peso-cost averaging will yield a profit in investing in Philequity Fund Inc. Note that the goal of this study is not to prove that peso-cost averaging is the ultimate investment strategy (because no one can as the market is unpredictable). The objective is to see if peso-cost averaging will yield a positive result with less effort but consistent investing.

The mechanics of the investment is as follow:
1. A fixed amount of P5,000 is invested every quarter starting 2001 up to last quarter of 2010.
2. No amount will be withdrawn during the entire period.


In the result shown, if you started investing 10 years ago at P5,000 per quarter (P1667 per month), by now you are more than halfway to become a peso-millionaire...not bad right?

Let us say you can only save P1,000 per month and invest it by the following rule:
1. Save P1,000 per month
2. Every year the accumulated sum will be invested to Philequity Fund, Inc. starting on Jan, 2006 up to Jan 2010.
3. No amount will be divested until end of 2010.



As you can see in the result, even at small amount of P1,000 per month you can have P116,911.73 in 5 years or a gain of P56,911.73.

If you have a child and are planning to prepare for their educational plan, this is a good solution.

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