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Cocolife is rediscovering ways to manage funds

Cocolife Building-IF_Image
The asset manager firmly believes that accumulating for the long-term is the most effective strategy to tide over the volatile market

The coronavirus pandemic has interrupted life in an unimaginable way, causing extreme strain on people. Economic anxiety was imminent with almost all suffering the brunt of this global health scare. In the Philippines, quarantine measures were implemented, resulting in less discretionary consumption, little to no private investments, crippled business operations and reduced economic activity. Consequently, the government has been doing what it can to ease the markets and support the affected sectors by employing fiscal and monetary stimulus. From Enhanced Community Quarantine (ECQ) to General Community Quarantine (GCQ) to Modified General Community Quarantine (MGCQ) to Modified Enhanced Community Quarantine (MECQ), several measures were imposed to effectively contain the infection.  

As the sweeping effects of the lockdown were felt across the Philippines due to closing borders and imposing restrictions on outdoor movement, the Filipinos were confronted with financial hardships. The protracted pandemic and the resultant economic downturn had forced some of them to stall their financial goals. It has also magnified concerns on financial health, with risk of significant reduction and even loss of income due to possible illness, layoffs and temporary closure of workplaces. Many Filipino families struggled to overcome the contagion effects of the pandemic and were forced to tap into their nest eggs for buying and paying essentials. This health crisis has raised anxiety among people as finding the new normal can be challenging—and an end to this phase is unknown.

Our road to recovery

The world is in a bleak situation and it is unclear how everything will fare over the short-term. Nonetheless, the Philippine economy has been resilient over time, steadily rising, albeit there were occasional periods of enduring world wars, recessions and contractions.  It might be a long way before the economy returns to the pre-Covid-19 levels as we grapple with the challenges induced by the pandemic, but we are hopeful that economic recovery will commence eventually. 

While the road to recovery for the Philippine economy is also paved with challenges, we believe the reinforcement of the socioeconomic strategy of the government alongside the restart of private companies’ operations will aid in stimulating economic activity. To allay the drastic halt of the growth story due to Covid-19 and cope with community quarantines, the government has adopted four pillars of recovery scheme through emergency support for vulnerable groups with various assistance programmes and wage subsidies; expanded medical resources; carried out liquidity infusion from monetary actions and other financing support; and developed programmes to create jobs and sustain growth along with the Republic Act (RA) 11469 or the Bayanihan to Heal as One Act.  Also, we are positive of the 2021 General Appropriations Act, which will provide the country with some of the most robust tools necessary to rebuild the economy and help attain growth targets for the coming year. As the economy reopens, industries and households are gradually adjusting to new ways and sharing a common vision to regain our economic momentum. 

In spite of the pandemic, the Philippine macroeconomic fundamentals continue to be strong. Our local interest rates remain accommodative; low inflation is manageable and within the target; external accounts are healthy with high gross international reserves; and sound fiscal position and peso have been stable.  Although the overseas Filipino remittances were impacted by the pandemic, this year’s figure would unlikely play out the worst-case scenario that analysts were earlier bracing for. It is important to note that FW remittances are among the country’s structural drivers in the past decades, fueling consumer spending. Further, international rating agencies including S&P, Moody’s and Fitch have maintained the Philippines’ investment grade status along with the government’s record of macroeconomic management.

Standing strong with CAMCI

Cocolife Asset Management Co., Inc. (CAMCI) has overcome similar distress in the past, and that our relentless commitment to deliver sound investment choices for everyone has become stronger than ever. While the current market weakness may warrant a certain level of cautiousness, this should not deter people from investing, especially for those with a long-term investment horizon. We believe that accumulating for the long-term is the most effective strategy to tide over the volatile market, and ride the current trend in anticipation of an eventual recovery. 

Over the years, our mutual fund products were able to meet the needs of our investors for the long-term, helping every Filipino person to achieve financial security. Our strategies continued to embark on sound and prudent decisions that will best protect the funds and the investor interest. Such prudence and due diligence in managing investments have allowed our funds to outperform benchmarks and generate encouraging returns.

United Fund, Inc. (UFI) has registered losses due to the contagion, in sync with equities markets across the globe. The 2020 stock market crash, instigated by the coronavirus outbreak, ended the 11-year bull run of the Philippine equities. Despite that, the fund has fared better than the Philippine Stock Exchange Index (PSEi). The management is rebalancing UFI’s portfolio actively, conducting defensive stock-picking initiatives and taking advantage of rallies to book positive gains. Likewise, the current strategy hinges on the reallocation of portfolios to stocks with long-term or historical fundamentals, which are expected to lead the market upon recovery. In fact, the local market has overcome huge corrective waves in the past, including the Asian and Global Financial Crises. Just like any other market crash, we believe that there will be an eventual upturn of events and that the long-term outlook for the Philippines remains positive.

Anchored by a sound strategy

For the peso bond and dollar balanced fund, the investment team continues to monitor inflation and interest rate movements locally and globally and strategise accordingly. Known as the Consistently Consistent Fund, Cocolife Fixed Income Fund’s resilience is anchored by its ability to weather extreme volatility, and has consistently recorded positive annual returns since inception. Our accrual-based investment strategy is maintained to counter the volatility in interest rates, while taking advantage of trading opportunities in government securities. This is in line with our commitment to our valued investors of capital preservation and superior returns.

Moreover, Cocolife Fixed Income Fund, Inc. (CFIFI) has been considered to be one of the best mutual funds in the industry, and is frequently recognised by award-giving bodies in the country and overseas. Against this background, CFIFI won the International Finance Award for Best Fixed Income Fund – Philippines 2020 for the second consecutive year. This back-to-back recognition proves that we are serious in our commitment to delivering superior performance to our investors. Cocolife Dollar Fund Builder, Inc., which is considered a safe haven fund for our overseas Filipino workers, continues to outperform its foreign balanced fund peers, primarily due to our continuous monitoring and retooling activities. Moving forward, we will continue to look out for trading opportunities to stretch the yields of the fund.

At CAMCI, we understand that we are in a difficult and stressful situation right now. Hence, we assure our clients that we will continue to deliver the highest levels of performance, availability and security aimed at their success. At the time of crisis, it is important to know how to manage funds to improve financial security and how to pivot without giving up on goals completely. Even if it is a nominal amount, it is vital to keep going, keep the momentum moving and keep benefiting from compounding.

With the advent of the GCQ and MGCQ in the Philippines, where M stands for Matatag (a Filipino term for strong), and G stands for growing with CAMCI during quarantine—we come out of the crisis together. While adapting to the new normal during the transition, Cocolife seeks to assist Filipinos with a wide access to funds that are needed to build their financial security. With that, they will be able to join the path to financial freedom.

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