An investor from the Philippines who wants to put money in U.S. ETFs can either choose from a limited menu of locally available feeder funds with U.S. ETF target funds, or directly open an international brokerage account and buy ETF shares directly. Down below is a simple calculator to determine whether it would be worth going through the hassle of opening an international brokerage account to directly invest in U.S. ETFs.Continue reading US ETFs: Direct Investment vs Feeder Funds
In comparing returns from PSEi index funds in the Philippines, the right benchmark to use is the PSEi Total Return Index (PSEi TRI). This is particularly true considering none of the PSEi index funds distribute cash dividends. The PSEi TRI accounts for cumulative price returns and cumulative return sof dividends reinvested back into the index, while the PSEi only accounts for price returns. The PSEi TRI was only introduced in 2019, but its history was back-calculated to 2007. Since it’s pretty new, I haven’t found any freely available resource for the PSEi TRI history. I recently came across this article, And the best equity fund is …, from the Philippine Daily Inquirer. This article was written by someone who is selling financial planning products, so not surprisingly, the article did not actually identify any particular index fund. Fortunately, it did provide some numbers for the PSEi TRI.Continue reading PSEi index funds vs the PSEi Total Return Index
I’ve discussed the important IRS tax issues when investing in the US as a non-resident alien from the Philippines in a previous post. I’ll repeat some of them here in discussing the known ways of lowering or avoiding altogether some of these US taxes.Continue reading How to pay lower US taxes on US investments as a non-resident alien from the Philippines
FMETF is the only ETF available in the Philippines. It tracks the 30-component PSEi. In a previous post, I noted that FMETF is a de facto accumulating ETF, since it has never distributed any cash dividends, in spite of its declared intention to do so.Continue reading Discrepancies in FMETF split-adjusted price history
The Philippines has only one available ETF in the market: the pioneering First Metro ETF (FMETF) which aims to the track the PSE Composite Index (PSEi).
When an ETF receives dividends from corporations whose shares it owns, it can either reinvest those dividends within the fund (accumulating ETF), or distribute the dividends to ETF shareholders (distributing ETF). So under which category does FMETF fall?Continue reading Is FMETF an accumulating ETF or a distributing ETF?
Home-country bias is the tendency of an investor to over-invest in his/her country’s domestic equity market in a scale that significantly exceeds the proportion of the size of the domestic market relative to the rest of the world.
Considering that even Americans, whose own stock market is 40% to 50% of the world market, can be guilty of home-country bias, it is not a surprise that investors from much smaller markets like the Philippines also exhibit this behavior. This is shown in the chart below, which visualizes data collected by Sercu and Vanpée from CPIS (December 2005) and World Federation of Exchanges, in their paper, Home bias in international equity portfolios: a review. When that paper was published, Filipinos’ equity portfolios were 99.5% domestic while the domestic market was just 0.1% of the world market cap.Continue reading Avoiding home-country bias in the Philippines
If you’re a Filipino investor and you want your investment portfolio to diversity into U.S. index funds, you have at least two options. One option is to open a trading account with a company like Charles Schwab. This will give direct access to thousands of U.S. stocks and ETFs.
An easier option is to invest in a unit investment trust fund (UITF) that acts as a feeder for a U.S. index fund. One such feeder fund is the BPI Invest U.S. Equity Index Feeder Fund (BPIUSFF). This fund invests directly in the largest ETF in the world, the SPDR S&P 500 Trust ETF (SPY). This ETF has total assets of almost $280 billion as of November 2019. It simply aims to track S&5 500 index of U.S. large cap companies. One reason why people like to invest in index funds is the low expense ratio. SPY’s gross expense ratio is only .0945%.Continue reading Is it worth investing in a US Equity Index feeder fund from the Philippines?
FMETF is currently the only exchange-traded fund (ETF) available in the Philippine Stock Exchange. FMETF was launched in 2013 and aims to track the performance of the PSE Composite Index (PSEI), which tracks 30 companies in the Philippine Stock Exchange.
As of November 4, 2019, FMETF’s total assets is PHP 1,680,365,665.87 or about $33.3 million. In comparison, the total PSEi market capitalization is PHP 10,073,517,502,927.30 or about $199.4 billion. So, FMETF’s market cap is 0.0167% of that of the PSEi, six years after it was first introduced. And again in that span of time, no other ETF was introduced in the market.
I was curious how ETFs in a neighboring countries fare. The Stock Exchange of Thailand (SET) has a quite a few ETFs available. The TDEX ETF introduced in 2007 tracks the SET50 index, and the ETF has total assets of $3.1 billion compared to SET50 capitalization of $388 billion. TDEX’s market cap is about 0.8% of that of the SET50 index. Keep in mind that there several ETFs in the Thailand market, some covering the larger SET100 and quite a few covering specific sectors. Needless to say, the Thai stock market is larger than the Philippine market.