8 Growth ETFs: Capture High Returns with Managed Risk

Exchange-Traded Funds (ETFs) have revolutionized the investment landscape globally, and the Philippines is no exception. ETFs offer investors a convenient and cost-effective way to gain diversified exposure to a wide range of asset classes, sectors, and investment strategies. They are particularly attractive for investors seeking to build long-term wealth while managing risk. In the Philippines, a growing selection of ETFs provides opportunities to tap into the country’s economic growth potential.

Understanding Growth ETFs

Growth ETFs are specifically designed to invest in companies or assets that are expected to experience above-average growth compared to the broader market. These ETFs typically focus on sectors or companies with strong earnings growth potential, innovative products or services, and expanding market share. While growth ETFs offer the potential for higher returns, they can also carry higher volatility. Therefore, understanding the underlying strategy and risk profile of each ETF is crucial.

8 Growth ETFs Available in the Philippines

This section details eight growth-oriented ETFs available to investors in the Philippines. Each offers a unique approach, allowing investors to tailor their portfolio to their specific risk tolerance and investment goals.

(Note: Always conduct thorough due diligence and consult with a financial advisor before making any investment decisions. Past performance is not indicative of future results.)  

1. iShares MSCI Philippines ETF (EPHE)

• Objective: Tracks the performance of the MSCI Philippines Investable Market Index.
• Strategy: Provides broad exposure to the Philippine equity market, including large-cap, mid-cap, and small-cap stocks. This offers diversification across different market segments.
• Key Benefit: Offers a comprehensive representation of the Philippine stock market, making it a good option for investors seeking broad market exposure.
• Consideration: Being market-cap weighted, it will be more heavily influenced by the performance of the largest companies. It is listed on a US exchange.

2. First Metro Philippine Equity Exchange-Traded Fund (FMETF)

• Objective: Replicates the performance of the Philippine Stock Exchange Index (PSEi).
• Strategy: Invests in a basket of blue-chip stocks listed on the PSE, representing the leading companies in the Philippine economy.
• Key Benefit: Provides exposure to the most established and liquid companies in the Philippines.
• Consideration: Concentrated in the largest companies, it may not fully capture the growth potential of smaller, faster-growing companies.

3. ATRAM Philippine Equity Smart Beta ETF (APS)

• Objective: Outperforms traditional market-cap-weighted indices while managing risk.
• Strategy: Employs a “smart beta” approach, selecting and weighting stocks based on factors like value, quality, momentum, and low volatility. These factors have historically been associated with outperformance.
• Key Benefit: Potentially higher returns than traditional index funds due to the factor-based selection process.
• Consideration: Smart beta strategies may underperform in certain market conditions.

4. Sun Life Prosperity Philippine Stock Index Fund (SLPHIL)

• Objective: Aims to provide investment results that, before expenses, closely correspond to the performance of the Philippine Stock Exchange Index (PSEi).
• Strategy: The Fund invests, under normal circumstances, substantially all of its assets in the stocks that make up the PSEi, with the same approximate weightings as the Index.
• Key Benefit: The Fund’s objective is to track the performance of the PSEi.
• Consideration: Will follow closely the PSEi, including down markets.

5. Philippine Stock Index Fund Corp. (PSIF)

• Objective: Aims to provide investment results that, before expenses, closely correspond to the performance of the Philippine Stock Exchange Index (PSEi).
• Strategy: The Fund invests, under normal circumstances, substantially all of its assets in the stocks that make up the PSEi, with the same approximate weightings as the Index.
• Key Benefit: The Fund’s objective is to track the performance of the PSEi.
• Consideration: Will follow closely the PSEi, including down markets.

6. BPI Philippine Consumer Equity Index Fund (BPICON)

• Objective: Provides exposure to the consumer sector of the Philippine economy.
• Strategy: Invests in companies involved in consumer goods and services, benefiting from the growing purchasing power of Filipino consumers.
• Key Benefit: Capitalizes on the Philippines’ strong domestic consumption story.
• Consideration: Performance is heavily dependent on the health of the consumer sector, making it susceptible to economic downturns or changes in consumer spending.

7. Philam Strategic Growth Fund (PSGF)

• Objective: Achieves long-term capital appreciation.
• Strategy: Actively managed fund that invests in a diversified portfolio of high-growth companies in the Philippines and across the Asia-Pacific region.
• Key Benefit: Potential for higher returns due to active management and broader geographic exposure.
• Consideration: Actively managed funds typically have higher expense ratios than passively managed index funds. Performance is dependent on the fund manager’s skill.

8. The ABF Philippines Bond Index Fund (ABFPI)

• Objective: Replicates the performance of the Markit iBoxx ALBI Philippines Index.
• Strategy: Invests in high-quality Philippine government and corporate bonds.
• Key Benefit: Provides exposure to the Philippine fixed-income market, offering a potentially less volatile investment option compared to equities. While focused on bonds, it’s included here because fixed income can be part of a growth portfolio, providing stability and income.
• Consideration: Returns are typically lower than equity ETFs, and bond prices are sensitive to interest rate changes.

Conclusion: Choosing the Right Growth ETF for Your Portfolio

Growth ETFs offer a compelling way for Filipino investors to participate in the potential of the Philippine market and, in some cases, the broader Asian region. By carefully considering your investment goals, risk tolerance, and time horizon, you can select the ETFs that best align with your overall financial strategy. Remember to diversify your portfolio and regularly review your investments to ensure they continue to meet your needs. It’s highly recommended to consult with a licensed financial advisor before making any investment decisions.

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