Nearly all Philippine funds down in 2022 as global rate hikes slam stocks and bonds

All but four Philippine mutual funds suffered declines in 2022, with the two worst performers – both from the stables of Canada’s Manulife Financial Corp. – losing almost 30% of their value, weighed down by global inflationary pressure, interest rate hikes, and domestic politics.

According to figures provided by Morningstar to Asia Asset Management (AAM), 80 of the 84 funds domiciled in the Philippines, or 95.2%, lost ground last year. Morningstar tracks funds’ performance in US dollar terms.

Manulife Dragon Growth Equity Feeder Fund, the worst performer, declined 28.35% year-on-year with Manulife American Growth Equity Feeder Fund in second place, shrinking 27.02%.

The worst performer in fixed income was BPI International Fund Plus, which lost 19.37%, followed by BPI Philippine Dollar Bond Index Fund, which shed almost 14%.

BDO Money Market Fund led the four gainers with a 0.86% increase. The runner-up was PNB Prime Dollar Money Market Fund, up 0.79%.

Rising global inflation and interest rate hikes by major central banks were the main factors that dragged down the Philippine mutual fund industry last year, according to a fund manager at an asset management company based in Manila.

A third factor, he says, was the local political climate, with Philippine stocks declining 3% in the month leading up to the May 9 presidential election, which was won by Ferdinand Romualdez Marcos Jr, son of former President Ferdinand Marcos Sr.

“During a challenging period like this, when inflation is high and interest rates are rising, investors do not want to deal with another uncertainty on the domestic political front. That’s why the stock market experienced a sell-down prior to the election,” the fund manager tells AAM, speaking on condition of anonymity.

Metrofund Starter was the largest Philippine mutual fund last year at US$1.4 billion. The second largest was BPI Short Term Fund with $1.2 billion. Their values were down 6.96% and 7.33%, respectively, from 2021.