Question: David, I’m not confident in the Philippine market because of corruption issues, and foreign investors see it as less stable than countries like Singapore, Taiwan, and Vietnam. Should I move to the global market? I have 10,000 pesos to invest monthly. What are your thoughts on the feeder fund? - Anna

Pros of Moving to a Global Equity Feeder Fund

1. Diversification Beyond the Philippines.

Instead of focusing only on the PSE, your money is invested across developed markets like the US, Europe, and Japan, as well as some emerging markets. This diversification reduces country risk tied to the Philippines.

2. Access to World-Class Companies

• Global equity feeder funds often invest in the S&P 500, Nasdaq, or MSCI World Index.

• You gain exposure to companies with strong fundamentals and global presence, such as Apple, Microsoft, Google, Nestlé, Toyota, and Samsung.

3. Stronger Historical Performance

• The Philippine market has lagged US/global markets in recent years.

• Over the last decade, US equities have outperformed the PSEi.

• Going global lets you benefit from stronger growth.

4. Currency Diversification (Peso vs USD)

• Global funds in USD mean peso weakness boosts your returns in PHP.

• This acts as a natural hedge against peso depreciation.

5. Higher Liquidity and Market Depth

• The US and global markets are deeper, more liquid, and less volatile than the Philippine market.

• Fund managers can adjust positions with minimal price impact.

Cons of Moving to Global Equity Feeder Fund

1. Foreign Exchange (FX) Risk

• If the peso strengthens, returns in PHP shrink despite USD gains.

• Example: If your fund grows 8% in USD but the peso strengthens 5%, your net return in PHP may shrink.

2. Higher Costs (Usually)

• Feeder funds often have higher fees due to both global and local management.

• Over 20 to 30 years, fees erode compounded returns.

3. Reduced “Home Market Advantage”

• Local funds may perform better if the Philippine economy rebounds strongly.

• By going fully global, you might miss out on local recoveries.

4. Market Correlation Risks

• Global equities still drop during worldwide downturns (like 2008 or 2020).

• You’re shifting volatility, not avoiding it.

5. Less Familiar Companies

• Some investors prefer familiar local companies (Ayala, SM, Jollibee).

• With global funds, you rely on the manager and global indices.

Disclaimer: The information provided on this blog is for educational and informational purposes only and should not be taken as personalized financial advice.

Investing involves risks, including the possible loss of principal. Past performance does not guarantee future results. Readers are encouraged to evaluate their own risk tolerance and, where necessary, consult a licensed financial advisor before making any investment decisions.

David Isaiah Angway, RFP®, CTEP®, CWA®, is a Registered Financial Planner, a Mutual Fund Advisor licensed by the Philippine Securities and Exchange Commission (SEC), and a Certified UITF Sales Personnel licensed by the Bangko Sentral ng Pilipinas (BSP).

As a licensed professional, he is authorized to assess a potential investor’s risk-return profile and ensure their suitability for investing in Unit Investment Trust Funds (UITFs) before participation.

The views and opinions expressed here are based on reliable public information and professional judgment at the time of writing but do not represent the official views of any financial institution.

The author and publisher shall not be liable for any losses or damages arising from the use or reliance on this information.

Ready to make your money grow smarter, not harder?

Out of over 22,500 Sun Life advisors, I’m among the 2,000 licensed Mutual Fund Advisors in the Philippines — qualified to help you invest confidently in both local and global markets.

Let’s build a personalized investment strategy that fits your goals, risk profile, and long-term vision.

📩 Book a private consultation today — and take your first step toward financial freedom and your ₱100M wealth plan.