FINCAPM K31
Chan Pao, T. (2022).Will the Real Philippine Index Mutual Fund Please Stand Up?.International
Review of Accounting, Banking and Finance. Vol. 14, No. 1.
1. What is the research study all about? What is its specific topic?:
● The research study is about the monthly performance metrics of the two oldest
Philippine index mutual funds and their benchmark index, the Philippine Stock
Exchange Index, from November 2011 to October 2021.
2. What are the theoretical framework and key concepts? How are these concepts
connected?
● The journal does not contain any specific theoretical framework but the key
concepts include Granger causality, R-squared, tracking error, and information
ratio.
3. What was the study’s research design? What kind of data analysis was employed? Was it
sound and logical? What are the independent and dependent variables if any? Are they
adequately described or defined?
● The research design involves a quantitative approach, and the data analysis
includes computing monthly returns, R-squared, tracking error, and information
ratio. The study is sound and logical since the author used the usual statistical
measures. The independent variables are the two index funds, while the
dependent variables are their performance metrics compared to the benchmark
index and actively managed funds.
4. What kind of data were collected?:
● Monthly performance metrics of Philequity PSE Index Fund, ALFM Philippine
Stock Index Fund, and the PSEi from November 2011 to October 2021 were
collected.
Natividad, Natasha Alyssa Lo
FINCAPM K31
5. What are the study’s major findings and conclusions? Are they in keeping with the
study’s expectations and hypotheses? Do they sufficiently answer the study’s original
research questions and objectives?
● ALFM Philippine Stock Index Fund is found to better mirror the PSEi compared to
Philequity PSE Index Fund. The study also compares these index funds with
flagship actively managed equity funds, identifying one as a "closet indexer" and
the other not closely following its index. The conclusions align with the study's
objectives, helping investors with fund selection.
6. How do the study’s findings and conclusions relate with other research reports and
information? Do they help improve knowledge and understanding of the study’s topic?
● The findings corroborate previous research by Chan Pao (2020), revealing closet
indexing and underperformance in actively-managed equity funds in the
Philippines.
7. What are the major contributions of the article?:
● The study contributes by helping investors choose between index funds mirroring
the PSEi. It also sheds light on actively-managed funds, identifying closet indexing
and providing practical advice for investment decisions.
8. What are some of the major weaknesses of the work? How might these weaknesses be
addressed?:
● Weaknesses may include limited generalizability and a focus on a specific time
period. To address this, future studies could consider a broader range of funds
and extend the analysis to different time frames.
Natividad, Natasha Alyssa Lo
FINCAPM K31
9. How can the ideas and the information generated by the article be applied?
● The information can be applied by investors in making informed decisions on
selecting index funds and understanding the performance of actively-managed
funds.
10. If you were to conduct a similar or follow-up study, what theoretical framework and
research method will you employ?
● A follow-up study could employ a similar theoretical framework but expand the
scope to include a more extensive set of funds and consider different time
periods.
Natividad, Natasha Alyssa Lo