With nearly 3 decades in the investments industry, our next featured expert has handled the investment portfolios of the largest banks amounting to billions. Marvin Fausto can often been seen in many forums, media interviews and seminars all over. He is one of those who I run to for wise investment counsel not only because he is one of the best investment managers of the country, but also because of his unquestionable integrity.

Marvin and his wife Rose are also in the forefront of the financial education advocacy. Along with their 3 sons, the Fausto’s are role models on how a family can have financial peace and enjoy a deeper purpose in life.

The 2012 Outlook of Mr. Marvin Fausto

We remain cautiously optimistic for the Philippines in general.

Even with the global economic slowdown, the resilient domestic consumption is being supported by steady OFW remittances and outsourcing revenues. To this, I estimate that the economy could grow anywhere from 4-5% GDP.

The financial sector on the other hand will remain very liquid coupled with stable inflation rates and low interest rates —  ideal for investments that is expected to generate employment and sustain domestic demand. Interest rates are expected to remain stable at around 4-5% while inflation also to remain benign at 3-4%.

As for the stock market, the Philippine stock exchange is expected to trade positively at around the 4,800 level. Last year’s reduced Government spending that caused the GDP slowdown, is slowly picking up and is expected to be the driver for growth for the country as well as the listed companies in the stock exchange this year.

Investments will center on infrastructure, agriculture, tourism, and education. Barring any major economic dislocation for our OFWs in the Middle East, US, and European markets, our domestic economy is expected to remain robust for 2012.

Marvin V. Fausto is the Senior Vice President and Chief Investment Officer of the country’s largest bank, BDO and in charge of the Investments unit managing close to P580B under the BDO Trust Banking Group.

Prior to this, he held the position as head of the Trust Banking Group of Equitable PCI Bank from 2002 to 2007 primarily responsible for its overall business and operations. He also held the position of Vice President and Investments Head at Citytrust Banking Corporation. He started his career as an analyst at the former Far East Bank & Trust Co.

After having served as President and director, Mr. Fausto is currently a Board Adviser to the Trust Officers Association of the Philippines, the umbrella organization of the Trust Industry. He was also the Founding President and current Director of the Fund Managers Association of the Philippines.

Mr. Fausto graduated from the Ateneo de Manila University in 1983 with a Bachelor of Science degree in Management Engineering and took MBA units at the Ateneo de Manila Graduate School.

Mr. Fausto is married to Mary Rose F. Fausto, the author of the insightful book “Raising Pinoy Boys” and has three sons, Martin, Enrique and Anton who are one of the country’s youngest investors.

How can an investment make it to my list of personal finance champions? Here’s why.

As a personal finance advocate, I and many other advocates have been teaching people on the power of regularly saving and investing. Many of us will use charts and illustrations showing the power of compounding especially if we are doing it on monthly basis. However, there is hardly any vehicle for us to do such investment on a monthly or semi-monthly basis; if there is, the minimum amounts required will marginalize many of us.

I have been writing and speaking about the advantages of pooled funds, especially for long term investing (please check my other blogs on pooled funds). Mutual Funds and UITFs are good investment vehicles for the average Pinoy and one can expect better capital growth in the long term for such instruments. However, Mutual Funds and UITFs have minimum amounts and although they are relatively low, many Pinoys still find it difficult to cough up the initial placement that ranges from P5,000 to P10,000. Further, many of us will start on investing on said pooled funds but will stop making additional placements because we find it inconvenient and we lack the discipline for force savings. To learn more about Pooled Funds visit my previously posted articles: Pooled Funds 1 & Pooled Funds 2

When I received a call from BDO’s Chief Investment Officer Marvin Fausto to have lunch, he said that he has something that he wants to show me that I will definitely find interesting. Since Marvin is a dear friend and one I respect and admire a lot, I agreed to meet him provided he pays for lunch (always a cheapskate I am). Mr. Fausto told me about a new product BDO will be launching, a UITF program that can be deducted from one’s savings account on a monthly or semi-monthly regimen. It was interesting but I didn’t think it was really anything new… besides, there are very few Pinoys who can afford a monthly debit of P10,000. What Marvin said after really caught my attention – he smiled and told me that the monthly deduction can be as low as P1,000 a month and the investor can chose among 3 funds BDO is offering: Bond, Balanced and Equities. My jaw dropped and asked him “really, you guys are willing to let people buy into your funds for P1,000? Wow!” Further, the convenience of auto deduction will be good for many of us who are not necessarily well disciplined in savings.  What I also like is that an investor just needs to go through the initial paperwork one time, no further documents, signatures, Know Your Client (KYC) questionnaires after.

Here’s the beauty of the EIP. If I am a conservative investor, I can opt to go for their Bond funds which are generally low risk investments. If I am aggressive and still have a lot of time before I need my funds, I can opt to be a risk taker and invest in their Equity funds. If I want to be in the middle of the ground when it comes to taking risks, I can opt for Balanced funds. While other banks can offer you UITF funds, I don’t think there is anyone that will let you invest for a small amount of P1,000 per month. Finally, there is a real product that is consistent with what we finance coaches teach, regular savings and investing over a long period of time and this time, even those with challenged incomes can now participate.

Truly, the BDO EIP is a Personal Finance Champion in my view. Pinoys should take advantage of investing through the EIP and other financial institutions should take queue from BDO. To Marvin Fausto, Ador Abrogena, Marily de Vera and the rest of the BDO Trust Department, mabuhay kayo!

Check out BDO’s EIP on their website

Question: With all the uncertainties in the world economy and markets, is it still wise to make investments in the stock market now?—Kris C. Lim, public relations practitioner

Answer: I have been taking note of all the developments worldwide particularly the economic woes of Europe and the United States.  Downgrading banks, debt default scares, increasing unemployment, recession and political instability are becoming so common that many are referring to our present situation as the “new normal.” Egad, it sure feels that all the business and economic developments we are experiencing will result in the rewriting of all the books as we know it. I don’t blame you for being skeptical in investing your money—I would be, too, and I actually am.

‘New normal’

With the United States and Europe so far from us, should we really be concerned? Definitely. Today’s borderless world economy has resulted in more economies being interdependent with each other. The United States, Europe and Japan are the largest of all markets and even if Asian countries have better fundamentals (and yes, the Philippines is definitely included), we will all feel the pinch as we are all covered by the laws of supply and demand.

To simplify, when people start to make less money because of a weakening economy, they will buy less of the goods and services we offer and that will not be good. A weakened economy will usually have a negative effect on profitability of corporations, and stock prices will likewise go down. When economies are not robust, people are also fearful of the future and investment markets react negatively.

Make a killing or be killed

Now back to your question. Should you invest now when we are under the ‘new normal’ environment? Well, the answer can be tricky. There are two scenarios that can happen. First, you can actually take advantage of the low prices of stocks and start bargain hunting. When you properly select blue-chip stocks that are profitable, well-managed and have a lot of good potentials, you can be sure that their prices will rebound when the market starts picking up.

Some prices are now at their lowest in months and buying them may be a good idea. On the other hand, buying stocks today might also be like catching a falling knife if the market continues to plummet. There is always that risk and buying a lot of stocks today with the current market condition is tantamount to speculating. When one speculates, he can make a killing or be killed—that’s just the rule of risk and return.

Personally, I would probably start looking for good-quality stocks that are now trading near their 52-week lows; just make sure that these companies have strong fundamentals and continue to be profitable despite the condition of the economy. However, it is unwise to have a high exposure or a big part of your portfolio invested at this conjecture as the market can continue to go south with no real recovery anytime soon.

Investment options

The whole European situation continues to make people fearful and that will be a cloud over our heads for an indefinite period of time.

You may also want to just invest through pooled funds like the UITF or Mutual Funds and leave all the trading, buying and timing to professionals who are focused solely on investing the funds. Experts actively managing funds can minimize losses during bearish environment and improve gains on bull runs.

If you chose to invest now in the stock market, or at any time for that matter, it is always prudent to look at this asset class as a long-term venture to weed out the volatility, or spread the risk over time. Further, do not be in a hurry to invest the bulk of your funds just yet because when the market does recover, it will not do so overnight and you will have time to re-enter the market when the trends are more evident.

Just a friendly reminder whenever you invest in the stock market or any other investment—consider your investment objective, time frame and risk tolerance first and foremost.

Be wise, stay prudent and be patient.

Originally posted at the Inquirer http://business.inquirer.net/25557/do-we-still-invest-in-times-like-these