A COMPARISON IN THE PERFORMANCE OF A
SAMPLE OF LOAD AND NO LOAD FUNDS IN THE
PHILIPPINES
by
Beatriz M. De Ocampo
Presented to the
Faculty of the Applied Math Program
In Partial Fulfillment of the Requirements for the Degree of
Bachelor of Science in Applied Math
University of Asia and the Pacific
Pasig City, Philippines
March 2015
1
Table of Contents
Title Page………………………………………………………………………………………………………….
1
Table of Contents……………………………………………………………..……………………………….
2
Approval Sheet ……………………………………………………………..………………………………….
3
Acknowledgement ……………………………………………………………..…………………………….
4
Abstract ……………………………………………………………..…………………………………………….. 5
Chapter I
Introduction
A. Background ……………………………………………………………………………………...
B. Statement of the Problem …………………………………………………………………
C. Objectives of the Study………………………………………………………………………
D. Scope and Limitations………………………………………………………………………
E. Significance of the Study……………………………………………………………………
F. Review of Related Literature……………………………………………………………..
6
9
10
10
10
11
Chapter 2
Methodology…………………………………………………………………………………………………….
25
Chapter 3
Results Discussion, Conclusions, Recommendations
A. Results Discussion…………………………………………………………………………....
B. Conclusions………………………………………………………………………………….…..
C. Recommendations…………………………………………………………………………….
28
31
31
Appendix A
List of Funds Included in the Study………………………………………………………………………… 32
Appendix B
t-Test Results on Actual Investment Amounts ……………………………………………….……... 34
Appendix C
t-Test Results on Return ……………………………………………………………………………………… 37
Appendix D
Graphs and Slope Values ………………………………………………………………………………………. 40
References ………………………………………………………………………………………………………….. 43
2
Approval Sheet
A COMPARISON IN THE PERFORMANCE OF A SAMPLE OF LOAD AND NO LOAD
FUNDS IN THE PHILIPPINES
By
Beatriz M. De Ocampo
Presented to the
Faculty of Applied Mathematics
of
University of Asia and the Pacific
In Partial Fulfillment of the
Requirements for the Degree
of
Bachelor of Science in Applied Mathematics
March 2015
DR. NOEMI BARCIAL-TORRE
Undergraduate Research Adviser
MR. MICHAEL SANCHEZ
Panelist
MS. KIMBERLY MAE VALLESTEROS
Panelist
3
Acknowledgement
I would like to thank the Lord for His love and care for me, for granting me wisdom,
understanding and strength and for being my comfort in times of disappointments. I dedicate this
to the Lord for I cannot do anything apart from Him. To God be all the glory, honor and praise!
I would also like to thank my family for their unending love and support for me. They have
encouraged me and reminded me that with the Lord, I can accomplish anything excellently. I
would like to appreciate my mom and my achi for sacrificing sleep to accompany me while I do
my thesis and for doing everything to make me smile and laugh whenever I felt frustrated. Also, I
would like to thank Kenneth for being so kind in helping me to gather and type my data and for
being so patient and understanding with me.
Moreover, I am grateful to my Math professors, Dr. Noemi Barcial-Torre, my research
adviser, Ms. Kimberly Vallesteros, Sir Michael Sanchez, Sir Durwin Santos and Ms. Jovel Nabia
for sacrificing a lot of their time to accommodate my questions and to help and guide me
throughout the research period. They are indeed a blessing to me and my batch mates.
I would also like to thank my AM family, Flora, Jenice, Sare, MJ, Chucky, Mike, Mari and
King, for all the help and support they have given me. I thank the Lord for all the memories we’ve
had together as classmates, friends and brothers and sisters. We laughed, cried and comforted each
other for four years and I can never ask for any better set of friends than what I have now.
4
Abstract
Financial investment vehicles such as mutual funds and Unit Investment Trust Funds
(UITFs) are used to combat the decreasing value of money caused by inflation. Because of this,
the mutual fund and trust industries have been growing in the country. However, mutual funds are
known to charge a fee known as load that is charged when one buys or sells his/her fund shares.
This causes a decrease in the amount of investment and since investors pay more, they expect
higher returns. On the other hand, UITFs do not charge such fee. Therefore, this study aims to
answer whether mutual funds have significantly higher returns compared to UITFs.
A sample of 18 mutual funds and 35 UITFs from three different types of funds were used
and analyzed in this study. Three different time periods were also considered in testing for the
returns. Out of the 8 tests with respect to fund type and time interval, 4 tests resulted in UITFs
having significantly higher returns compared to mutual funds while the other 4 tests did not show
any significant difference. Therefore, UITFs performed better compared to mutual funds.
5
Chapter 1
Introduction
Background of the Study
For the past five years, the Philippines has been experiencing positive inflation rates. In
effect, prices of goods and services have increased while the purchasing power of consumers has
decreased. If this continues, the value of a 100 peso bill will further depreciate. Since this imposes
a threat in meeting the current and future demands of consumers, it is important to be aware of the
possible ways on how to beat out inflation, as well as to achieve financial security.
Putting money in investment vehicles such as mutual funds and Unit Investment Trust
Funds (UITFs) have become effective ways to make money grow. In fact, the concept of mutual
funds had already emerged in the Philippines way back in the early 1950s. The first fund to be
established in the country was the Filipinas Mutual Fund (FMF). This was incorporated in
December 1957. Back then, the companies that operated such funds were registered as finance
companies. Due to the lack of a governing law that supervised the activities concerning these
funds, companies favored long-term investment programs. This forced their investors to agree with
a fixed payment scheme of P50/month for 20 years and that the initial amount invested would
serve as commission. In addition, some companies imposed sale charges as high as 8% and frontend loads as high as 50%. Because of these terms, investors had to give successive payments
thereafter to be able to break-even or gain a profit (PIFA, 2004).
The system on how mutual funds were sold and managed was heavily criticized. This led
to the closure of three of the four companies that operated them. In addition, the government
enacted R.A. 2629 or the Investment Company Act (ICA), which “governs the creation, regulation,
licensing and monitoring of the Mutual Fund Industry in the Philippines” (Sawali, 2014).
6
However, instead of improving the system, this act contained too strict measures that hindered the
development of the mutual fund industry (PIFA, 2004).
The first company to register its shares since the approval of R.A. 2629 was Trinity Shares.
It publicly sold it shares on October 1969. The company then was able to open 11 other branches
and double its monthly sales within four months. Also, the value of the company increased to as
much as 27% in the last quarter of the year. Because of this, other companies, such as the Pacific
and Malayan Funds owned by Alfonso Yuchengco and Ting Roxas Bancom, also registered their
funds (PIFA, 2004).
Unfortunately, developments in the mutual fund industry did not last long due to the
political instability caused by the emerging dictatorial regime. Mutual funds depended on the
performance of the stock industry. So when the Philippines was under Martial Law, the Manila
Stock Exchange experienced a 30% dive. With the great loss of the Manila Stock Exchange plus
the absence of options to diversify funds, the Securities and Exchange Commission (SEC)
prohibited the sale of mutual funds in 1973. Even Trinity Shares and Malayan and Pacific Fund
stopped their operations due to these events (PIFA, 2004). Other factors that contributed to the
downfall of the mutual fund industry were the lack of government regulation, deteriorating
political and economic condition of the country, absence of alternative investment vehicles and an
undeveloped equity market.
It was acknowledged in the late 1980s that mutual funds have a significant role in the
development of the capital markets. In the efforts to revive the mutual fund industry, Asian
Development Bank (ADB), through Jardines, began a study on mutual funds while SEC provided
people to oversee the formulation of the Implementing Rules and Regulations (IRR) of the ICA,
which “increased paid-up capital from P500,000 to P50,000,000, adding a 24-month hold out, and
7
increased required audits to four per annum”. The newly formulated IRR was declared on October
1989 and was effective 90 days after. The first company that registered under the new IRR was
the Galleon Fund. It first sold its shares on February 1, 1991 and since then, the number of funds
registered by companies have greatly increased (PIFA, 2004).
The birth of UITFs in the Philippines started when it replaced the Common Trust Fund
(CTF) in the year 2004. CTFs served as an alternative vehicle for investments and had its own
advantages compared to mutual funds. According to the study of Valderrama and Bautista (2003),
the operations of CTFs are within the bank’s premises. Because of this, CTFs had access to
“depositors and investors seeking alternatives to traditional banking deposits and to have
immediate ‘brand equity’ which is very important to investors” (Valderrama & Bautista, 2003) (as
cited by Abrogena, 2005).
However, the development of this industry was hampered by the imposition of reserves on
CTFs by the Bangko Sentral ng Pilipinas (BSP). This action resulted to an increase in cost on the
operation of CTFs that led to the withdrawal of investments of some investors, thus decreasing the
assets of these funds. To improve the condition of the CTF industry, banks offered tax exempt
CTFs by the Comprehensive Tax Reform Program (CTRP). Also, CTFs dominated in US dollars
and invested in the high yielding dollar dominated Philippine government bonds (ROP bonds).
Reserves were not imposed on them which made them attractive to investors. Since then, the CTF
industry started to grow again until 2004 (Abrogena, 2005).
The conversion of CTFs to UITFs was done in the attempt to improve the capital market
of the Philippines. The difference of the two mainly lies in the valuation of the fund. “CTFs use
the amortized cost method of valuing fixed income investments while UITFs will mark to market
investments and will only invest in securities that are marketable and tradable” (Abrogena, 2005).
8
To be at par with international standards and practice, the country’s UITF framework with
its regulatory framework were developed in 2008. This process “included the adoption of a Client
Suitability Assessment (CSA), which clients must undergo to help assess their investment
objectives, risk tolerance, investment preferences and experience” (Circular No. 593, 2008)
Today, BSP continues to change certain regulations to help improve transparency of banks’
investment products such as UITFs in order to promote protection of investors. BSP Governor
Amando Tetangco Jr. issued BSP Circular No. 852, Series of 2014, which orders to enhance
disclosure requirements of UITFs. This circular also allows trust specialists to create multi-class
UITFs, which is composed of “several classes of units which may be differentiated based on level
of trust fees and holding period” (Rada, 2014). According to Tetangco, operational efficiency and
improvements in the economy’s scale for collective investments can be promoted through the
creation of multi-class UITFs.
Statement of the Problem
The researcher aims to answer the following questions:
1. In the Philippines, the majority of mutual funds are load funds while the majority of UITFs
are no load funds. Loaded funds are expected by investors to give higher returns due to the
added fees that they pay. Since mutual funds and UITFs operate similarly, do mutual funds
(load funds) perform better than UITFs (no load funds)?
2. Mutual funds and UITFs are both subdivided into four main types: equity funds, bond
funds, balanced funds and money market funds. In each of the three chosen divisions, do
mutual funds perform better than UITFs?
9
Objectives of the Study
The main objective of the study is to show if load funds perform better than no load funds
by comparing the performance of Philippine mutual funds to Philippine UITFs. Furthermore, this
study aims to show which of the two funds perform better in each of its subdivision given certain
time periods.
Scope and Limitations
This study only includes mutual funds which are load funds and UITFs which are no load
funds under three classifications: (1) equity funds, (2) bond funds, and (3) balanced funds. The
funds included should also have a minimum investment of P100,000 or less. There are a total of
18 peso-denominated mutual funds and 35 peso-denominated UITFs used in this study. The time
interval considered was from December 2009 to December 2014.
Mutual funds and UITFs have different fees attached to them. All these fees are ignored in
the analysis of the performance of these funds except for the load fees associated to mutual funds.
Significance of the Study
The results of this study may be beneficial to the following: (1) current and future investors,
(2) students majoring in Finance, and (3) members of the academe of the Finance or Math
Departments of different universities.
Since this research study aims to answer which type of fund performs better, the results
may help future investors in deciding whether it is better to invest in mutual funds or UITFs.
Current investors may also choose to either continue or change to another type of investment given
the findings of this study. This research may also answer if the load fees are worth paying or not.
On a scholarly scale, students and professors who would research on the performance of
either or both mutual funds and UITFs may use this study as an additional reference to the existing
10
body of knowledge known about the performance of these funds. They may also adopt this research
and make further studies on this matter by considering more funds and adding into consideration
the other fees associated to the purchasing, selling and maintenance of these funds.
Review of Related Literature
Mutual Fund
1.1 Loads
A load is a fee charged when an investor buys or sells fund shares. The first type of load is
the front-end load or sales commission. This is a fee charged at the moment of purchase of the
shares of a fund. This would result in a deduction in the initial investment of the investor, thus
reducing the size of the investment. The other type of load is called back-end load or contingent
deferred sales charge (CDSC). This load is charged when the fund shares are sold or redeemed
(Thune, n.d.).
Front-end loads are used to pay for financial services and advise from investment
intermediaries such as financial planners and brokers. Since these investors pay more for their
expertise, it can be argued that investors would expect higher returns from their investments
as compensation for paying the load (Kuhle & Pope, 2000). However, according to the
Investment Company Institute (ICI) (2014), the front-end loads paid by the investors have
declined since the year 1990. As of 2013, investors of equity funds and bond funds only pay
an average of 1% and 0.7% respectively as front-end load compared to the 5.3% and 3.8%
maximum front-end load charged to these funds respectively. These load fee discounts are due
to the large purchases of investors and waived fees granted to them.
11
1.2 Fees
Aside from the load charges that are needed to be paid either during purchase or redemption
of loaded funds, there are also other fees that have to be considered when choosing and maintaining
a fund. These fees are also applicable to no-load funds.
Management fees are fees that are paid to the fund adviser for managing the investment
portfolio. It is charged annually, as a percentage (e.g. 0.45% -0.5%) of the total amount invested
under management. 12B-1 fees are distribution fees used to pay sales and marketing costs of the
fund and sometimes to pay shareholder service expenses as well. This fee is also capped at 1% by
law, meaning that the total sales and services fee should total to a maximum of 1% of the fund
(Markese, 1999).
Other fees include: redemption fees, exchange fees, account fees and purchase fees.
Redemption fees are not the same as back-end loads and purchase fees are not the same as frontend loads. Because these fees are payments given directly to the fund for either purchasing or
redeeming shares of an investor and not as payment for the services of the investment
intermediaries associated with these funds. In addition, SEC limits the companies from charging
redemption fees higher than 2% (U.S. Securities and Exchange Commission, n.d.).
1.3 Share Class Types
From which load and fees are applicable to the range of expenses that an investor would
expect to pay are determined by the share class of mutual funds. The division of mutual funds into
share classes also helps investors match which type of fund best fits them as investors. According
to Kent Thune (n.d.), there are a total of seven fund classes.
Class A shares are charged with usually a 5% or higher front-end load but have a lower
12b-1 fee compared to other share classes. The 12b-1 fee of Class A shares are generally at 0.25%
12
(morganstanley.com, 2015). This type of share class is more beneficial for those who choose to
hold long term investments, because it gives the investor an opportunity to avail of discounts on
the front-end load when it reaches a certain amount. This is also known as breakpoints (Carther,
2005).
Class B shares, on the other hand, are charged with back-end loads and a higher 12b-1 fee
(1%) than other class shares (morganstanley.com, 2015). Like Class A shares, Class B shares are
fitting for investors who prefer long-term investments because the deferred sales charges decrease
as time increases. Though Class B shares do not have breakpoints, it can be converted to Class A
shares after a number of years (usually after 7 to 8 years). The disadvantage of Class B shares is
that it has the highest expense ratio compared to Class A and Class C shares because of its higher
12b-1 fee (Carther, 2005).
Class C shares are level loaded funds. This means that it is not charged with a front-end
load but charged with a small back-end load, usually at 1% that can be removed after a year
(Hymiller, 2011). However, it has a continuous high expense ratio due to its high 12b-1 fee,
typically at 0.75%, compared to Class A shares (morganstanley.com, 2014). Class C shares are
best for short-term investors since it would be expensive to maintain this type of class share for
several years given that it does not offer any discounts and is not convertible to Class A shares
(Thune, n.d.).
Class D shares are like no-load funds because they are not like Classes A, B and C shares
which are charged with a front-end load, back-end load, or level-load respectively. Although Class
D shares are not loaded, there are still on-going fees, such as the 12b-1 fee, that investors have to
pay (Thune, n.d.). Institutional class funds or Class I shares are also like no load funds. This has
the least expense ratio because it does not charge a 12b-1 fee (Plaehn, n.d.). However, these shares
13
are only sold to institutional shareholders, which are businesses “that hold shares in publicly-traded
companies” (thefreedictionary.com, n.d.).
Class R shares, also known as retirement shares, are basically for those investors who are
thinking about their retirement. This type is made specifically for retirement accounts which would
provide income in the future (Greshman, n.d.). Load charges are absent in Class R shares but have
12b-1 fees, ranging from 0.25% to 0.50%. Lastly, advisor shares are generally load-waived funds
but charge 12b-1 fees to as much as 0.50%. This can only be bought through an investment advisor
(Thune, n.d.).
1.4 Related Studies
There have been many extensive studies on the performance of mutual funds. These studies
started in the 1960’s where Lintner (1965), Treynor (1965) and Sharpe (1966), used the Capital
Asset Pricing Model (CAPM) to evaluate the performance of mutual funds in relation to risk and
its expected return (Hoedemakers, 2011).
Sharpe’s findings suggest that investors are not
compensated for the loaded fees because funds with lower expense ratios receive higher returns
(as cited by Kuhle & Pope, 2000).
This finding was soon supported by the study of Michael Jensen (1967) on the performance
of 115 mutual funds from 1945 to 1964 on the basis of the fund manager’s forecasting ability. The
goal of these fund managers is to out-perform the index of the market to increase returns of the
portfolio given a certain level of risk. These services also entail higher costs. However, the findings
of Jensen showed that the mutual funds performed below the benchmark index which propose that
the low returns could not compensate the additional charges paid by the investors. The measure he
used was the Jensen’s Alpha which is “based on the theory of the pricing of capital assets by Sharpe
(1964), Lintner (1965) and Treynor (1965)” (Jensen, 1967).
14
Some later studies had the same conclusions as Jensen’s. Chang and Lewellen’s (1984)
study focused on superior market-timing and security selection skills of fund managers applied to
managed portfolios. They studied a total of 67 mutual funds from January 1971 to December 1979.
The results showed that the skillfulness of fund managers in both market timing and security
selection did not make a significant impact in the return of the observed mutual funds. A similar
study of Henriksson (1984) also showed the same results (as cited by Hoedemakers, 2011).
Another study that agreed with the results of Jensen, was the study on the informational
efficiency of mutual fund performance in 1965 to 1984 by Elton, et al. (1993) and the study of
Malkiel (1995) on the equity mutual fund returns during 1971 through 1991. Malkiel used the
capital asset pricing framework to analyze the returns. Results showed that these equity funds
underperformed compared to the benchmark portfolios after deducting the management fees and
even the gross of all expenses except for load fees. Therefore, it is better for investors to invest in
passively managed funds (Malkiel, 1995). A more recent study by Fama and French (2010) also
had the same results (as cited by Hoedemakers, 2011).
However, there are also studies that contradicted the results of the studies previously
mentioned. Ippolito (1989) sought to know how the performance of randomly selected mutual
funds would fair with index funds. His study included 143 mutual funds during the period of 19651984. Aside from the returns, he also considered the turnover rated, fees and expenses of the funds.
He hypothesized that actively managed funds would generate higher returns and used CAPM
equations to test his hypothesis. True enough, “the results showed that mutual funds with higher
turnover, fees and expenses earn rates of return sufficiently high to offset the higher charges. These
results are consistent with the notion that mutual funds are efficient in their trading and information
gathering activities” (Ippolito, 1989).
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There is also a study on European mutual funds that had the same results as Ippolito. Bams
and Otten (2002) used the Cahart (1997) 4-factor asset-pricing model in order to investigate the
performance of 506 funds from the five most important mutual fund industries in Europe. These
are the French, Italian, Dutch, UK and German funds. This study also aimed to prove whether the
ability of European fund managers in managing the funds would result to better returns. Unlike
U.S. funds, Bams and Otten added back the costs to the funds which they observed. Results showed
that four out of the five funds significantly out-performed the market (Bams and Otten, 2002).
Aside from the studies that look generally at the performance of mutual funds with respect
to different factors set by the researchers, there are also studies that directly dealt with the issue
between load and no-load funds. One of the first researches that showed the effects of management
fees and loads on the performance of mutual funds was by Friend, et al. (1962). They examined
the entire mutual fund industry from January 1953 to September 1958 and they concluded that
“there was no significant relationship between management fees and performance” (as cited by
Kuhle & Pope, 2000).
Another study was done by Veit, et al. (1998), which compared the performance of load
and no-load funds with respect to the length of time these funds are kept. “They hypothesized that
there is an investor’s indifference period” (as cited by Kuhle & Pope, 2000). This means that load
and no-load funds would eventually have the same amount of return, assuming that there is no
significant difference in the risk-adjusted gross return performance of both load and no-load funds
and that no-load funds have a greater expense ratio. Another hypothesis made by the researchers
was that load funds would perform better than no-load funds if kept longer. However, results
showed that there is no significant difference in both the extent of expense ratios and average net
returns of load and no-load funds (as cited by Kuhle & Pope, 2000).
16
Grinblatt and Titman (1994) also had a similar conclusion that there is no significant
relationship between the performance of the fund with its expense ratios and NAVs. However,
data gathered from 279 mutual funds observed from 1974 to 1984, showed significant statistical
relationships between performance and management fees and loads. On the other hand, Volkman
and Wohar (1995) added more factors to consider in their study such as the size and policy goals
of the fund. They also considered past and future performances of the funds. Results showed that
investors are not compensated enough given the additional fees and loads they pay. They also
conclude that “high management fees result in negative persistent fund performance and that low
management fees result in high persistent fund performance” (as cited by Kuhle & Pope, 2000).
Droms and Walker (1996) conducted a similar study that reviewed the asset size, turnover
rate, expense ratio, and objective of 151 mutual funds in relation to its overall performance from
1971 to 1990. This study also resulted to a conclusion that there is no significant relationship
between fund performance and its load status. Lastly, Hooks (1996) hypothesized that “load funds
tend to have lower annual management fees and, thus, outperform the higher fee no load funds”.
This may be caused by discounts and breakeven point options for loaded funds. Furthermore, he
divided his study into a 3-year short term horizon and a 15-year long term horizon. With a total of
1,012 observed equity funds, he focused on relating the load charges with the annual expenses and
returns. The result of his study is described below.
Low expense funds significantly outperformed high and very high expense funds. For
funds with similar expenses, the load funds do not produce returns sufficient to offset the
load versus no-load funds. However, when broken down by expense level, load funds
(even high load funds) with low expenses do sufficiently outperform high expense, noload funds. This finding may be the result of high expense funds being characterized by
higher turnover than low expense funds. Given fund managers' inability to select “above
17
average” stocks, this leads to higher expenses but not higher returns, and thus lower netof-expense returns (Hooks, 1996).
Given the results of the numerous studies on the performance of mutual funds in relation
to its sales charges, we can suggest that investors of loaded funds must be compensated in other
ways since most of the studies show a negative relationship between fund performance and load
charges.
1.5 Philippine Mutual Funds
As mentioned above, the mutual fund industry has been in existence since the 1950s.
Though this industry has experienced some threats in the past such as highly charged fees and an
unstable political environment, improvements in the rules and regulations issued by SEC resulted
to the revival and growth of this industry.
Today, mutual funds in the country are categorized according to investment objective.
There are four basic types of mutual funds: (1) stock/equity, (2) balanced, (3) bond and (4) money
market funds. Equity funds primarily invest in shares of stock issued by Philippine corporations
that are listed in the Philippine Stock Exchange (PSE). This is the riskiest type of mutual fund
which results to an aggressive rate of gain or loss. Balanced funds are invested in both shares of
stocks and bonds. This type of fund has a high potential for growth but is tempered by the
conservative growth that goes with fixed-income securities. Bond and money market funds both
invest in fixed-income securities and therefore have conservative growth rates. The difference of
the two lies in the length of time of the investment. Money market funds usually have a shorter
investment period such as a year or less (PIFA, 2004).
According to pinoymoneytalk.com (2014), there are a total 49 mutual funds in the
Philippines. The breakdown of these funds is as follows:
18
Classification
Equity
Number of Funds
Peso
11
Dollar
1
Balanced
Peso
9
Dollar
3
Peso
10
Dollar
11
Bond
Money Market
Peso
4
Unit Investment Trust Funds (UITFs)
2.1 Fees
When investing in trust funds, a trust fee is always present. Trust fees are collected
yearly but the amount may differ for every type of trust fund. BPI’s trust fees range from
0.25%-1.5% per annum. This fee covers the “costs of investment research, management,
marketing and routine administrative expenses of the trust entity” (China Bank Savings,
n.d.). Trust fees are like the counterpart of the management fees of mutual funds.
Aside from the trust fees, UITFs also charge early redemption fees. Though UITFs
have no maturity date, an investor must still keep the fund until its minimum holding
period. If the investment is pulled out before the required holding period, then the investor
will be charged with an early redemption fee. For trust funds under BDO, the early
redemption fee is 1% of the original participation amount.
19
Most UITFs have no load fees but some funds, such as the Odyssey Funds of BPI,
charge a front-end load fee. However, the rate of load fees of UITFs is much lower than of
mutual funds (0.5%-2% for UITFs and 1%-5% for mutual funds) (Villafuerte, 2010).
2.2 Unit Investment Trust Funds of the Philippines
UITFs are classified the same way as mutual funds. However, the bond funds can
be further classified into three different funds: (1) Intermediate funds (which has a duration
of up to 3 years), (2) Medium Term Funds (which has a duration of up to 5 years), and (3)
Long Term Funds (which has a duration of greater than 5 years) (uitf.com.ph, n.d.).
UITFs are regulated by the Bangko Sentral ng Pilipinas (BSP). As of 2014, there
are 24 member banks with a total of 148 trust funds. The breakdown is as follows:
Classification
Equity
Peso
Dollar
Balanced
Peso
Dollar
Bond
Intermediate
Peso
Dollar
Medium
Peso
Dollar
Long-Term
Peso
Dollar
Money Market
Peso
Dollar
Number of Funds
27
6
18
1
12
5
9
7
15
10
31
7
20
Comparing Mutual Funds and UITFs
A mutual fund and a Unit Investment Trust Fund (UITF) are similar in the sense that they
both comprise of a pool of money from different individuals and corporate investors that are used
to make multiple types of investments. However, the differences of these funds are in terms of
their offerer, fund manager, sales agents, price, fees, laws applicable to them and regulatory body
(pinoymoneytalk.com, 2010).
Mutual funds are offered by investment companies, managed by fund managers and sold
by a person licensed by the Securities and Exchange Commissions (SEC) as a Certified Investment
Solicitor. Buying a mutual fund share would entitle the investor to become a stockholder of that
company and enjoy the same rights and privileges of a regular stockholder. These rights include
the right to vote in the election of the board of directors and the right to receive dividends. On the
other hand, UITFs are products offered by banks, managed by the Trust Group of the bank and
can be sold even without the license given by SEC. Unlike mutual funds, investors of UITFs do
not own shares but investment units of a company, making them stockholders
(pinoymoneytalk.com, 2010).
In terms of pricing, both funds are measured by its current Net Asset Value (NAV). Mutual
funds correspond to shares while UITFs correspond to investment units. The price of these funds
are expressed and reported in Net Asset Value per Share (NAVPS) and Net Asset Value Per Unit
(NAVPU)
respectively.
The
formulas
for
both
are
as
follows:
NAV = Current Value of Fund Assets – Fund Liabilities
NAVPS/NAVPU = Current Value of Fund Assets – Fund Liabilities
Total Number of Shares/Units
21
These are computed daily and their results determine the buying or exit price when an
investor chooses to either buys a fund or redeems his investment (Abrogena, 2006). The formulas
for the purchase price and redemption fee are as follows:
Purchase Price = NAVPS/NAVPU + Applicable Front End Fee
Redemption Value = NAVPS/NAVPU - Applicable Exit Fee
As mentioned earlier, both funds have corresponding fees such as the ones above. There
are certain fees common to both funds such as management fees (known as trust fees for UITFs)
and early redemption fees. On the other hand, load fees are usually charged when purchasing or
redeeming mutual funds, known as front-end or back-end load respectively.
In order to avoid the same mistakes of the early pooled-fund industry, the companies and
their funds must be well-regulated by law and by a government body. The agency that regulates
mutual funds is SEC while the regulating agency of UITFs is BSP. A more detailed comparison
on mutual funds and UITFs are seen in the table below.
Table 1. Comparative Table of Mutual Funds and UITFs
Mutual Funds
Regulating Agency
Price
Governing Rules
and Regulations
SEC
NAVPS
ICA Rule 35-1: Investment
Company Rule, Corporaton Code,
and Securities Regulation Code
Unit Investment Trust Funds
BSP
NAVPU
Circular No. 852 (Series of 2014)
to be added as Sections X410 and
4410Q of the Manual of
Regulations for Banks and Manual
Regulatons for Non-Bank
Financial Institutions
22
Nature
Open-ended Pooled Fund
Participants in the Participants are stockholders and
are owners of the corporation.
Fund
Contributions to the fund shall be
in terms of shares of stocks
Capital
Minimum Subscribed and Paid-in
Requirements
Capital of at least P50 million per
investment company
Current Number of 10 investment companies
Players
Allowable
Any investment class except
Investments
commodity future contracts,
precious metals, unlimited liability
investments, margin purchases of
securities
Single Issuer Limit
SBL limits
Reserve
Requirements
Reportorial
Requirements
Circular No. 853 (Series of 2014)
that allows the creation of multiclass Unit Investment Trust Funds
Open-ended Pooled Fund
Participants are trustors.
Contributions of the fund shall
always be in terms of units of the
fund.
Upon incorporation/establishment,
a trust corporation shall have a
minimum paid-in capital of P300
million.
24 member banks
Marketable/Tradable Investment
Classes and Bank Deposits. The
fund may avail financial
derivative instruments solely for
the purpose of hedging risk
exposures.
Shall not exceed 15% of the market
value of the fund, except
obligations of the Philippine
government
Shall not exceed 10% of the
company’s
NAV,
except
obligations of the Philippine
government, or 10% of outstanding
securities of any of any one investee
company
10% of the fund in any single entity 15% of the fund in any single entity
Liquidity Reserves: 10%
None
Investment companies shall submit
to SEC a monthly report showing
the following information:
 Total amount received from
the sale of shares
 Total amount of redemption
 Number
of
shares
outstanding at the beginning
and end of the month
 Number of shares sold and
redeemed during the month
 Percentage
of
the
outstanding shares owned
by Filipinos
Trustees shall submit at least a
quarterly report to trustors,
beneficiary, principal or other
party in interest showing the
following information:
 Income statement
 Balance sheet
 Schedule of earning assets
of the account and
investment activity report
For the BSP, trustees shall submit
quarterly
audited
financial
statements of Trust and Other
23
Regular
Publications
Marketing
Personnel
Mandatory daily publication of the
fund’s NAV per share in at least two
national newspaper.
Must be a Certified Investment
Solicitor, a license given by SEC to
allow a person to market and sell
mutual funds
Beneficial Interest Determined through the fund’s Net
of each participant Asset Value per Share (NAVPS)
Valuation Method Marked-to-Market
of Securities
Fund Taxation
Subject to 32% corporate income
tax and Documentary Stamp Tax of
P2 per P200 on original issuance of
shares
Investment
Subject to interest income taxes on
Taxation
different investment class
Shareholder
NAV increment is not subject to
Taxation
capital gains tax but any dividend
declaration is taxed at dividend tax
rate for individuals.
Plan Amendments
Amendment of the articles and
bylaws need approval of the board
of directors and vote at least 2/3 of
shareholders.
Fiduciary Business and Fund
Management Activities and the
auditor’s letter of comments on
trust/IMA’s internal control.
Mandatory weekly publication of
the fund’s NAVPU and the moving
return on investment (ROI) of the
fund on the year-to-date (YTD)
and year-on-year (YOY) basis in
one or more national newspaper
Personnel are not necessarily
licensed but must undergo a
standardized training program
offered by the banks.
Determined under the unitized Net
Asset Value per Unit (NAVPU)
Marked-to-Market
None
Subject to interest income taxes on
different investment class
The income of the trustor is subject
to 20% final withholding tax
The plan may be amended by
resolution of the board of directors
of the trustee provided however
that participants are notified
immediately and shall be allowed
to withdraw their participation if
they are not in conformity with the
amendments made.
Sources: Manaloto (2005), BSP, SEC
24
Chapter 2
Methodology
The data used in this study are the end of the month NAVPS and NAVPU values of mutual
funds and UITFs, respectively. The performance of the funds were evaluated in three time periods:
1 year, 3 years and 5 years. Therefore, the span of the data used was the period from December
2009 to December 2014. The NAVPS values were obtained in the websites of the participating
investment companies while the NAVPU values were obtained in the website, www.uitf.com.ph.
After gathering all the Net Asset Values (NAV), the researcher removed the funds which
had inception dates after December 31, 2013 and funds which had initial investments of more than
P100,000. The researcher also desired to compare equal number of mutual funds to UITFs for each
subdivision. This was done by selecting the funds which have the same performance rank based
on their ROI as of October 2014.
Since the NAV of the selected funds had a wide range of values, the data used for testing
was the actual value of the investment based on the monthly NAV. The actual value of investment
was obtained by multiplying the number of shares and the NAV at the end of each month. And the
number of shares was obtained by dividing the initial investment amount by the NAV of the
starting date of each time interval. The initial investment was an assigned amount of P100,000.
However, this amount varied for mutual funds by subtracting the respective front-end load stated
in the prospectus of each mutual fund.
After this neutralizing process of data points, these were inputted and assessed using the tTest Paired Sample for Means because the funds compared were of the same rank. Since this
method is a paired test, there is a one-to-one correspondence between the values of the two
25
samples. Say, the values of sample 1 are x1, x2, …, xn and the values for sample 2 are y1, y2, …, yn, then
each xi corresponds to a yi. This test, therefore, computes for the difference (xi – yi) of each paired value.
The t-Test Paired Sample for Means is used to determine if two sample means are equal or
not and if the difference of the values are significantly different or not. For this study, the null
hypothesis used was µMF = µUITF, while the alternative hypothesis used was µMF > µUITF or µMF <
µUITF,
depending on which fund had a higher mean value. The researcher rejected the null
hypothesis whenever the p-value (one-tailed) was less than 0.1 and whenever t Stat was greater
than t Critical.
If there was a significant difference in the performance of the funds, the return was
calculated. The method of computing the return varied on the time interval considered.
The Point-to-point Method or Absolute Return was used in calculating the 1 year return for
each fund. It considers the NAV on the beginning and end of the holding period. “The advantage
of this method is that it can be used to virtually all kinds of funds” (ET Bureau, 2011). The formula
for getting the return is seen below.
Return =
𝑁𝐴𝑉𝑒𝑛𝑑 − 𝑁𝐴𝑉𝑠𝑡𝑎𝑟𝑡
𝑁𝐴𝑉𝑠𝑡𝑎𝑟𝑡
x 100
On the other hand, the average annual rate of return was calculated for the 3-year and 5year intervals. This method reports historical return that measures long-term performance of funds
expressed as a percentage.
1
𝑁𝐴𝑉𝑒𝑛𝑑 𝑛
Average Annual Return = [(
)
𝑁𝐴𝑉𝑠𝑡𝑎𝑟𝑡
− 1] x 100
*where n = number of years
26
After getting the return of each fund for each time interval, the return values were inputted
and assessed using, again, the t-Test Paired Sample for Means, following the same null hypothesis
and alternative hypotheses. The same method was used because the returns of the funds compared
are of the same rank also. If the test showed that there was a significant difference in the return of
the funds, the result was verified by graphing the values of the actual investment of all the funds
and calculated its slope. If the slopeMF > slopeUITF, then mutual funds performed better than UITFs
and vice versa.
27
Chapter 3
Results Discussion, Conclusion and Recommendation
The method used for testing the significant difference between the amount of growth of
investment of mutual funds and UITFs was the t-Test Paired Sample for Means. The value for t
Stat, t Critical two-tail and p one-tail were checked. Considering a 90% confidence level, the pvalues should be less than 0.1 to conclude that there was significant difference. Also, t Stat should
be greater than t Critical to conclude the same.
Results from this test showed that for equity and bond funds, there was significant
difference between the values of investment between mutual funds and UITFs for the 1-year, 3year and 5-year interval. However, for balanced funds, there was no significant difference between
the values of investment for the 3-year period. This result is shown below (See Appendix B for the
other results).
Table 2. t-Test result for Balanced Funds (3-year interval).
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
NAVPS
122645.8121
106639609.4
185
0.845497588
NAVPU
122898.1619
130192936.6
185
0
184
0.559870928
0.288124212
1.653177088
0.576248423
1.972940542
28
As seen in Table 2 above, the one-tail p value is greater than 0.1 and the t Stat value is less
than the t Critical one-tail value (0.56 < 1.65). With these results, the decision is to accept hnull and
the conclusion is µMF = µUITF.
For the assessment of the return, the same test was used for all comparisons except for the
balanced funds (3-year interval), which showed no significant difference from the previous
assessment. The summary of results are shown below.
Table 3. Summary of Return Results using t-Test Paired Two Sample for Means
Fund Type
One Year
Three Years
Five Years
Equity
µMF < µUITF
µMF < µUITF
µMF = µUITF
Balanced
µMF = µUITF
-
µMF = µUITF
Bond
µMF = µUITF
µMF < µUITF
µMF < µUITF
The table above shows which type of funds performed better in terms of return with respect
to its fund type and time interval. With the result shown above, out of the 8 tests performed, four
tests showed significant difference. These are Equity funds (1-year interval), Equity funds (3-year
interval), Bond Funds (3-year interval) and Bond Funds (5-year performance). And in all of these
tests that showed significant difference, UITFs or no-load funds out-performed mutual funds or
load funds. (See Appendix C for the detailed results of these tests).
29
Table 4. Performance of Mutual Funds under Equity (3-year Interval)
MF Equity Funds (3 years)
ATRKE Equity
SunLife Equity
Philequity
Philam Strategic
United
250,000.0000
Amount
200,000.0000
150,000.0000
100,000.0000
50,000.0000
0.0000
0
5
10
15
20
25
30
35
40
Number of Months
Table 5. Performance of UITFs under Equity (3-year Interval)
UITF Equity Funds (3 years)
BDO equity
Metro
SB Peso
CPB
AUP
Amount
250,000.0000
200,000.0000
150,000.0000
100,000.0000
50,000.0000
0.0000
0
5
10
15
20
25
30
35
40
Number of Months
To verify the results of the t-test, the researcher computed for the slopes of the tests that
showed significant difference. Table 4 and 5 above show the graph of the performance of Equity
funds compared earlier. By simply looking at the graph, the movements are almost the same.
However, when the researcher computed for the slope, the result was that the slopeMF < slopeUITF.
Therefore, this result was consistent with the result of the t-test. (See Appendix D for the other
results).
30
Conclusion
1. There is a significant difference in the performance of all funds in all time periods in terms
of the amount of growth the investment has incurred except for the balanced fund for the
3-year interval.
2. UITFs (no load funds) out-performed Mutual Funds (load funds) in four cases of
comparison. However, the four other tests of comparison showed no significant difference
in the return of mutual funds and UITFs. There was also only one consistent pattern in the
results. This was that UITFs performed better compared to mutual funds for the 3-year
interval.
3. Overall, UITFs performed better compared to mutual funds since there was no event that
mutual funds out-performed UITFs.
Recommendations
1. The researcher proposes that future researchers should include more funds in the study.
This may help generate more accurate results.
2. Future researchers should also take into consideration other fees associated to the buying,
selling and maintenance of funds. By including these factors in the study, the resulting
values of return would be closer to the actual return that investors gain in reality.
31
Appendix A
List of Funds Included in the Study
Mutual Funds
Equity Funds
1. ATRKE Alpha Opportunity Fund
2. ATRKE Equity Opportunity Fund
3. Philam Strategic Growth Fund
4. Philequity Fund Inc.
5. Sun Life Prosperity Equity Fund
6. United Fund
Balanced Funds
1. ATRKE Philippine Balanced Fund
2. NCM Mutual Fund of the Philippines
3. Optima Balanced Fund Inc.
4. PAMI Horizon Fund
5. Philam Fund
6. Sun Life Prosperity Balanced Fund
Bond Funds
1. Cocolife Fixed Income Fund
2. Philam Bond Fund
3. Philequity Peso Bond Fund
4. Prudentialife Fixed Income Fund
5. Sun Life Prosperity Bond Fund
6. Sun Life Prosperity GS Fund
Unit Investment Trust Funds
Equity Fund
1. AB Capital Equity Fund
2. AUP Equity Fund
3. BDO Peso Equity Fund
4. BDO Sustainable Dividend Fund
5. BPI Philippine High Dividend Equity Fund
32
6. BPI Philippine Equity Index Fund
7. Equity Investment Trust Fund
8. Metro Equity Fund
9. PNB High Dividend Fund
10. Rizal Equity Fund
11. SB Peso Equity Fund
12. UCPB Equity Fund
13. UnionBank Large Capitalization Philippine Equity Portfolio
Balanced Funds
1. AB Capital Balanced Fund
2. BDO Peso Balanced Fund
3. BPI Balanced Fund
4. CBC Balanced Fund
5. Growth Fund
6. Mabuhay Prestige Balanced Fund
7. Metro Balanced Fund
8. Rizal Balanced Fund
9. SB Peso Balanced Fund
10.UCPB Balanced Fund
11. UnionBank Peso Balanced Portfolio
Bond Funds
1. ABF Philippines Bond Index Fund
2. BDO GS Fund
3. BDO Merit Fund Medium Term Portfolio
4. Diamond Fund
5. Infinity Peso Intermediate Term Bond
6. Infinity Peso Long Term Bond Fund
7. Peso Investment Trust Fund
8. SB Peso Bond Fund
9. UCPB Peso Bond Fund
10.UnionBank Infinity Prime Fund
11.UnionBank Tax Exempt Portfolio
33
Appendix B
t-Test Results on Actual Investment Amounts
Equity Funds (1 year)
t-Test: Paired Two Sample for Means
NAVPS
Mean
109058.0189
Variance
56764556.52
Observations
78
Pearson Correlation
0.924154387
Hypothesized Mean
Difference
0
Df
77
t Stat
15.98227057
P(T<=t) one-tail
1.80348E-26
t Critical one-tail
1.292643029
P(T<=t) two-tail
3.60696E-26
t Critical two-tail
1.664884537
NAVPU
116482.2527
97740139.86
78
Equity Funds (3 years)
t-Test: Paired Two Sample for Means
NAVPS
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
127779.4346
270803164.6
185
0.912787542
NAVPU
138617.2411
371262205
185
0
184
18.54043986
2.88246E-44
1.286169474
5.76491E-44
1.653177088
Equity Funds (5 years)
t-Test: Paired Two Sample for Means
NAVPS
Mean
164353.3939
Variance
1911453202
Observations
305
Pearson Correlation
0.893803188
Hypothesized Mean
Difference
0
Df
304
t Stat
11.49772342
P(T<=t) one-tail
6.02645E-26
NAVPU
186332.08
4368830586
305
34
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
1.28434257
1.20529E-25
1.649881428
Balanced Funds (1 year)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
NAVPS
105805.7226
24326089.82
78
0.701415777
NAVPU
108392.1725
21589871.18
78
0
77
6.156465451
1.56248E-08
1.664884537
3.12496E-08
1.991254395
Balanced Funds (3 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
NAVPS
122645.8121
106639609.4
185
0.845497588
NAVPU
122898.1619
130192936.6
185
0
184
0.559870928
0.288124212
1.653177088
0.576248423
1.972940542
Balanced Funds (5 years)
t-Test: Paired Two Sample for Means
NAVPS
Mean
157651.1143
Variance
896752232.7
Observations
244
Pearson Correlation
0.922400181
Hypothesized Mean
Difference
0
Df
243
t Stat
7.774378409
P(T<=t) one-tail
1.07231E-13
t Critical one-tail
1.651148402
P(T<=t) two-tail
2.14462E-13
NAVPU
151874.7389
817030913.3
244
35
t Critical two-tail
1.969774395
Bond Funds (1 year)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
NAVPS
98577.19433
2803202.485
78
0.672601837
NAVPU
101021.0572
1865325.945
78
0
77
-17.1035649
3.02587E-28
1.292643029
6.05174E-28
1.664884537
Bond Funds (3 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
NAVPS
109071.2712
55426000.2
185
0.854248706
0
184
-13.03630105
3.061E-28
1.286169474
6.122E-28
1.653177088
NAVPU
113180.0242
67291253.19
185
Bond Funds (5 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
NAVPS
119417.0421
188349234.5
305
0.944619906
0
304
-15.1773079
2.02842E-39
1.28434257
4.05685E-39
1.649881428
NAVPU
124462.7413
276493674.3
305
36
Appendix C
t-Test Results on Return
Equity Funds (1 year)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
22.23676185
71.4696746
6
0.532436203
UITF
27.94178329
105.7391948
6
0
5
-1.51897762
0.094616458
1.475884049
0.189232916
2.015048373
Equity Funds (3 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
13.9546387
30.24055135
5
0.917377351
UITF
18.40858466
21.30305305
5
0
4
-4.46514986
0.005558053
1.533206274
0.011116105
2.131846786
Equity Funds (5 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean Difference
df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
MF
16.73469802
35.6572127
5
0.31628793
0
4
-0.91829682
0.205212674
1.533206274
0.410425349
UITF
19.60547164
35.81348333
5
37
t Critical two-tail
2.131846786
Balanced (1 year)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
12.52037713
2.257728805
6
-0.23099649
UITF
13.482895
3.3591271
6
0
5
-0.89825972
0.205106993
1.475884049
0.410213985
2.015048373
Balanced (3 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
8.03601948
7.501507
5
-0.069908
UITF
10.27344721
0.585736641
5
0
4
-1.7282386
0.07950492
1.53320627
0.15900983
2.13184679
Balanced (5 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
8.03601948
7.501507
5
-0.069908
UITF
10.27344721
0.585736641
5
0
4
-1.7282386
0.07950492
1.53320627
0.15900983
2.13184679
38
Bond Funds (1 year)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
1.723605121
0.439744948
5
-0.20435799
UITF
2.692646
3.097901
5
0
4
-1.08143744
0.170172388
1.533206274
0.340344776
2.131846786
Bond Funds (3 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
4.745240455
4.160512072
5
0.708862666
UITF
6.453133459
0.715328566
5
0
4
-2.44983905
0.035228746
1.533206274
0.070457492
2.131846786
Bond Funds (5 years)
t-Test: Paired Two Sample for Means
Mean
Variance
Observations
Pearson Correlation
Hypothesized Mean
Difference
Df
t Stat
P(T<=t) one-tail
t Critical one-tail
P(T<=t) two-tail
t Critical two-tail
MF
6.331455576
1.919476086
5
0.82786444
UITF
7.299899
1.320964
5
0
4
-2.78649616
0.024744411
1.533206274
0.049488823
2.131846786
39
Appendix D
Graphs and Slope Values
Performance of Mutual Funds under Equity (1-year Interval)
MF Equity Funds (1 year)
ATRKE Alpha
ATRKE Equity
Philam
Philequity
Sun Life Equity
United
Amount
150,000.0000
100,000.0000
50,000.0000
0.0000
0
2
4
6
8
10
12
14
Number of Months
Performance of UITFs under Equity (1-year Interval)
Amount
UITF Equity Funds (1 year)
BDO Sustainable
PNB High Dividend
BPI Phil Equity
SB Peso
BDO Equity
BPI Phil High
150,000.0000
100,000.0000
50,000.0000
0.0000
0
2
4
6
8
10
12
14
Number of Months
SlopeMF = 1649.030408
SlopeUITF = 2149.367946
40
Performance of Mutual Funds under Bond (3-year Interval)
MF Bond Funds
Amount
Philam Bond
Philequity
Sun Life Bond
Sun Life GS
Cocolife
160,000.0000
140,000.0000
120,000.0000
100,000.0000
80,000.0000
60,000.0000
40,000.0000
20,000.0000
0.0000
0
5
10
15
20
25
30
35
40
Number of Months
Performance of UITFs under Bond (3-year Interval)
UITF Bond Funds
Amount
UCPB
Peso Investment
Infinity Peso Inter.
BDO Merit
SB Peso
160,000.0000
140,000.0000
120,000.0000
100,000.0000
80,000.0000
60,000.0000
40,000.0000
20,000.0000
0.0000
0
5
10
15
20
25
30
35
40
Number of Months
SlopeMF = 451.4138734
SlopeUITF = 558.2117513
41
Performance of Mutual Funds under Bond (5-year Interval)
Amount
MF Bond Funds (5 years)
180,000.0000
160,000.0000
140,000.0000
120,000.0000
100,000.0000
80,000.0000
60,000.0000
40,000.0000
20,000.0000
0.0000
0
10
20
30
40
50
60
70
Number of Months
Philam Bond
Philequity Peso
Sun Life Bond
Sun Life GS
Cocolife
Performance of Mutual Funds under Bond (5-year Interval)
UITF Bond Funds (5 years)
200,000.0000
Amount
150,000.0000
100,000.0000
50,000.0000
0.0000
0
10
20
30
40
50
60
70
Number of Months
ABF Bond Index
Diamond Fund
SlopeMF = 610.5977116
BDO GS
UCPB
UnionBank
SlopeUITF = 694.4644702
42
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