Managing Market Volatility

After a six year bull run that saw unprecedented gains, the Philippine stock market experienced volatility throughout the year and finally ended 2015 with a loss of 3.85%. The fluctuations were caused by global factors such as China’s economic slowdown, a large drop in world oil prices, and indications of an increase in US interest rates. Although on a whole, the growth of the Philippine economy has been sustained, the common question is how the upcoming elections will affect the local markets.

Not surprisingly, the recent dips have affected market confidence. To address this, key figures in the financial sector spoke at "Checkmate 2016", a recent forum intended to help clients make winning moves by equipping them with the right information. Philam Asset Management, Inc. (PAMI) President and CEO Ferdinand Berba reminded investors to remain levelheaded in the midst of uncertainty. "Volatility is a part of investing, which is especially seen in the stock market. Having the right mindset is critical. The focus should be on long-term goals."

To underscore this point, Berba presented the 5-year and 10-year historical charts of the Philippine Stock Exchange Index (PSEi). While volatility is seen on the short-term, both historical charts clearly displayed an upward long-term trend. "If you look at these graphs, there are attractive opportunities during market downturns, since stock prices become cheaper," he emphasized. "Regular investing also reaps benefits, as it lowers average costs. It created less anxiety than timing the market."

Apart from consistency, diversification is another proven method to balance out returns. To this end, Berba pointed out the usefulness and efficiency of managed funds in various asset classes. "These funds already have diversified asset levels and geographic portfolios to spread out risk," he noted. "Moreover, they make it very easy to reinvest income, thus initiating the power of compounded interest and increasing total returns over time," he concluded.

PAMI is Philam Life’s asset management subsidiary, whose assets under management have grown to P47.393 billion in 2014 from P21.903 billion in 2004. PAMI is one of the largest asset and wealth management companies in the country, managing mutual funds from different asset classes and is a major contributor to the development of the Philippine mutual fund industry. PAMI has won eleven awards from PIFA in 2015 alone, and has consecutively been named Most Trusted Brand, Investment Fund Category by Reader’s Digest since 2010.

To learn more about Philam Asset Management, Inc. (PAMI), visit philamfunds.com