Volume 1: President’s Message on COVID-19 pandemic
April 01, 2020
NAVps are dropping, especially the stock fund. Can you provide insights on what is happening with the market?
Just three months into 2020, Philippine equities have been on the volatile side, characterized by the deeper downswings even worse than the performance during the Asian and global financial crises in 1997 and 2008, respectively. The presence of Black swans (a term coined for events that are responsible for the steep drops), such as the heightened regulatory risk on utilities/water sector, and the extraordinary Taal eruption and the ongoing COVID-19 crisis contributed to the lethargic outlook on local stocks.
A market correction, as what has been occurring across the globe, was largely attributed to the panic and fear over the COVID-19 pandemic. Concerns linger on how it will spiral into an economic crises and a global recession. Locally, the coronavirus has been responsible for the lockdown imposition of Luzon, which resulted to less discretionary consumption, little to no private investments, crippled business operations, and the less economic activity. The government has been doing what it can to calm the markets and support various sectors affected, by employing fiscal and monetary stimulus. The economic impacts are underscored by the prolonged loss of economic activity, for which we are expecting a lower GDP print at least in the first half of the year, and its effect can still linger if the government fails to swiftly contain the virus spread.
How is CAMCI dealing with the current crisis? Are investments and redemptions still accommodated?
CAMCI is devising ways to continuously cater to the needs of its investors during the Luzon-wide enhanced community quarantine. At present, we are effectively accommodating customer inquiries and requests coursed through email addressed to the Investor Relations Office. Certified Investment Solicitors (CISols) can also be easily accessed through their phone numbers and emails. Investments and redemptions are still accepted via the IRO (via email) or through the client’s Investment Specialist. The Daily Net Asset Value per Share (NAVps) is also posted in the Philippine Investment Funds Association (PIFA) and the company website on an uninterrupted basis. CAMCI also continues to provide fund reports, market updates and investment advisories to keep you abreast of how current events affects your investments.
What is CAMCI’s investment strategy to cope with the impacts of COVID-19?
The high risk of uncertainty prompted the investment team to embark on sound, and prudent decisions that will best protect the funds and the investors. For the stock fund, the current strategy is hinged on the reallocation of portfolio to stocks with long-term/historical fundamentals, which are expected to lead the market upon recovery – as they been in previous market crashes. For the peso bond and dollar balanced fund, the investment team continues to monitor inflation and interest rate movements locally and globally and strategize accordingly. Likewise, we maintain our accrual based investments so as to minimize the impact of interest rate volatility. This is consistent with our commitment to our valued investors of capital preservation and superior returns.
What is the best option for investors at this volatile market?
Essentially, a volatile market is a difficult market to trade in. For kitchen-table investors, the best advice is actually to do nothing. Don’t panic. Don’t sell. Stay invested. But for those who have the guts, windows of opportunity present itself during these times. The PSEi is now trading at 9.6x forward earnings, less than half of its peak and the lowest since 2008. Accumulating for the long-term, especially for those with excess cash, can ride the current market trend, in anticipation of an eventual recovery when the dust settles. As Mark Twain says “History does not repeat itself, but it often rhymes.” Investors saw their portfolios lose 48% or more during the financial crisis in 2008. But year after, the stock market recovered 63% and the bull market continued until last year, giving a 10Y CAGR of 10% and cumulative return of 145%. It only proves that the old investment chesnut is correct: “Time in the market beats timing the market.” But it is also true that the anatomy of each bear market is different. Averting the worst-case scenario depends on the duration of the health crisis and what will be the damage to the real economy.
Given our current situation, it is very important for our clients to be well-informed, and continuously be mindful of opportunities and risks. CAMCI, through the IRO, Sales, Investment and Research teams, will employ strategies to deal with the COVID-19 impacts, and will work tirelessly to aid you in your investment decisions during this difficult time.
Despite this global pandemic, the company will continue to uphold its vision “leading the way towards financial freedom”.
Volume 2: President’s Message on the extension of the enhance community quarantine
April 08, 2020
To our valued investors,
We hope that you continue to be healthy and safe as we reach out to you again by this time. As one, we are facing a truly extraordinary situation. The global coronavirus pandemic is affecting our families, our businesses and our way of life. Just recently, the government has extended the Enhanced Community Quarantine until April 30, 2020 to fight the further spread of Covid-19.
Last week, we released a newsletter providing an update on the prevailing market conditions, CAMCI’s investment and operational strategies to cope with the impacts of COVID-19, as well as the best option for clients. But the most important thing we want you to know is that your welfare is our top priority. Our thoughts and prayers are focused on the health and safety of our investors, employees, families and communities, and our hearts go out to anyone directly or indirectly affected by the virus.
We understand that this is a difficult and stressful situation for everyone, especially with the recent extension of the Enhanced Community Quarantine. Hence, we would like to extend our assurance that despite the extended ECQ, we at CAMCI are still actively monitoring our Mutual Fund portfolio and looking after your investments. CAMCI has overcome crises like this in the past (i.e. global financial crisis in 2008), and that our relentless commitment to deliver sound investment choices is stronger than ever. For those invested in United Fund, Inc., our equity fund, we maintain our recommendation for you not to panic and to stay invested, as redemptions would only realize investment losses. But for our Cocolife Fixed Income Fund, Inc. investors, we are pleased to inform you that CFIFI continues to be stable and is not affected by the current market volatility. We would also like to invite our investors to review your financial objectives as this crisis can bring life lessons and opportunities in the future.
As we deal with this pandemic, our highly-skilled workforce will continue to deliver the highest level of performance, availability, and security aimed at your success. Please always feel free to contact your Investment Specialist for your needs and concerns. They are very much willing to assist you anytime.
In the observance of the Holy Week this Lenten season, we join you and the Filipino people in prayer to overcome the adversities and challenges during these trying times. As one, we will overcome this crisis.
Very truly yours,
Mr. Artemio A. Tanchoco, Jr.
President
Volume 3: INVEST NOW!
April 15, 2020
To Our Valued Investors,
For the past weeks, we released a series of newsletters providing Cocolife Asset Management, Co., Inc.’s operational and investment strategies in the backdrop of the ongoing COVID-19 crisis. To keep our valued clients abreast of current events, we would like to provide updates on the Philippine Stock Market’s performance.
The 2020 stock market crash, instigated by the coronavirus outbreak, ended the 11-year bull run of Philippine equities. Such event was not only a rare case as capital markets across the globe tumbled amid the extreme volatility. Note that the local market has overcome huge corrective waves in the past, including the Asian and Global Financial Crises. Below is a table illustrating how the PSEi recovered from the previous bear markets:
| Market Event |
% Correction |
% Post-correction rally |
| 1989 Coup attempt / Black Monday |
-51.00% |
110.00% |
| 1997-1998 Asian Financial Crisis |
68.81% |
143.39% |
| 2003 EDSA 2 / SARS outbreak |
-59.18% |
257.03% |
| 2007-2008 Global Financial Crisis |
-55.21% |
324.18% |
| 2013 Super typhoon Yolanda & QE Taper |
-21.50% |
39.96% |
| 2015-2016 Fed Rate hike / China slow down |
-25.20% |
33.43% |
| 2018 US-China Trade war |
-24.87% |
23.45% |
| 2020 Taal Eruption & COVID19 |
-45.09% |
28.61% so far (April 15) |
Source: CAMCI – Equities Dealing Estimates
Disclaimer: Historical performance does not guarantee future returns
As we have stated from our previous newsletters, windows of opportunity present itself in a volatile market. The current market weakness may warrant a certain level of cautiousness, but should not deter one from investing, especially for those with long-term investment horizon. Accumulating for the long-term, especially for those with excess cash, can ride the current market trend, in anticipation of an eventual recovery. It is true that there’s a possibility that we have not yet reached the bottom of the market downturn. But it is also true that it is difficult to time the market. Further, we may note that the greatest returns were made by investing for the long-term. The price at which we bought a share was not important. What matters is how long we hold it. Holding investments for the long-term was the most effective strategy to tide over the volatile market. So we are encouraging our valued investors to INVEST NOW! Remember, time in the market beats timing the market.
Depending on one’s risk tolerance and investment horizon, you may consider investing or adding position to United Fund, Inc.
UFI is a growth-oriented mutual fund which seeks to maximize income and maintain liquidity of investments, through a diversified portfolio of listed equity issues. This is advisable for investors who do not have the expertise or time to manages their own funds. Clients are also able to maximize their profit or earnings given the power of pooling the funds together even with a small capital. Clients can invest in UFI for as low as 1,000 (initial investment) and 500 (subsequent investments), and reap the same percentage as those who invested with a higher amount.
Please always feel free to contact your Certified Investment Specialist or our Investor Relations Officer for your needs and concerns.
Thank you and stay safe!
Mr. Artemio A. Tanchoco, Jr.
President
Volume 4: Consistently Consistent Fund
April 23, 2020
Dear Clients,
It is my prayer that this bulletin reaches you and your family safe and healthy at this time of Enhanced Community Quarantine due to COVID-19. We would like to inform you that the management is ready to adjust its operations and workforce depending on the decision of the government, on whether the ECQ will be lifted on April 30, 2020 or will be extended. Nonetheless, we believe that we need to brace ourselves for the “new normal”.
While we are waiting for the flattening of the curve and that things get better, we, at Cocolife Asset Management, want to guide our investors with their investment decisions.
We understand that not all investors can take extreme volatility. However, there is no need to worry, since we have a fund for our clients who want safety of investment despite market uncertainties.
Tagged as the “Consistently Consistent Fund”, Cocolife Fixed Income Fund, Inc., has shown resilience over the past years, overcoming extreme volatility in the mutual fund industry and financial markets as a whole. This fund has yielded consistent positive returns since its inception, align with our commitment to our valued investors of capital preservation and superior returns.
Moreover, CFIFI has been named as one of the best mutual funds in the industry, regularly bagging recognition from award-giving bodies at home and abroad. Just recently, CFIFI has been recognized as the “Best Fixed Income Fund – Philippines 2020” by International Finance for the second consecutive year. This back-to-back recognition proves that we are serious in our commitment to deliver superior performance to our investors.
Moreover, CFIFI has been named as one of the best mutual funds in the industry, regularly bagging recognition from award-giving bodies at home and abroad. Just recently, CFIFI has been recognized as the “Best Fixed Income Fund – Philippines 2020” by International Finance for the second consecutive year. This back-to-back recognition proves that we are serious in our commitment to deliver superior performance to our investors.
So, instead of holding onto your excess cash, why not consider investing or adding position to Cocolife Fixed Income Fund, Inc.?
CFIFI is an income-oriented mutual fund, which seeks to generate regular interest income, consistent with its policy to preserve capital and to maintain liquidity of its investments through a diversified portfolio of corporate bonds, government securities and other fixed income instruments. This is advisable for conservative investors who want income with moderate risk. Clients can invest in CFIFI for as low as 1,000 (initial investment) and 500 (subsequent investments), and reap the same percentage as those who invested with a higher amount.
As of April 22, 2020, the fund’s returns, which are not subject to withholding and/or income tax, are as follows:
| NAVPS |
Year-to-date Return |
| 3.1626 |
1.55% |
| |
Annual Return |
Cumulative Return |
| One-year Return |
4.79% |
4.79% |
| Three-year return |
5.29% |
16.74% |
| Five-year return |
5.10% |
28.26% |
While CAMCI management and staff are working from home, we can be reached by our valued investors through the company’s website and email. Please feel free to communicate with us to raise your concerns. We can be reached to help you.
Thank you and stay safe!
Mr. Artemio A. Tanchoco, Jr.
President
Volume 5: Leading the Way
May 15, 2020
Our Valued Investors,
Amidst the shift to the Modified Enhanced Community Quarantine, Cocolife Asset Management is effectively following its Business Continuity Plan (BCP), devising ways and tweaking our capacities to ensure that the best services are provided for your investment needs. Throughout the transition of adapting to the new normal and even as uncertainties linger, we remain committed in leading the way.
Despite our current operational capacity, the management continuously caters to requests and inquiries, process investments and redemptions, and publish the daily Net Asset Value per Share (NAVPs) in an uninterrupted basis. Moreover, our Investment team monitors fundamental and technical catalysts, provides up-to-date reports on market and fund performance, and actively conduct strategic portfolio reallocations to deliver with our promise of capital preservation and superior returns.
Such prudence and due diligence in managing your investments have allowed our stock fund to outperform its benchmark, and generate encouraging returns for the peso bond and dollar balanced funds.
United Fund, Inc. has registered losses due to the contagion, in sync with equities markets across the globe. Despite this, the fund fares better than its benchmark, the Philippine Stock Exchange Index (PSEi). We understand that some investors are uncomfortable with bearing heavy losses, but rest assured that the management is rebalancing UFI’s portfolio actively, and is conducting defensive stock-picking initiatives and taking advantage of rallies to book gains. Just like any crises, we believe that the there will be an eventual recovery and that the long-term view for the Philippines remains positive.
UFI vs PSEi
April 30, 2020
NAVPS: 2.7271
YTD Return: -25.37%
PSEi: 5,700.71
YTD Return: -27.06%
Meanwhile, Cocolife Fixed Income Fund, Inc.’s resiliency is anchored on its ability to weather extreme volatility, recording consistently positive returns since its inception. Our accrual-based investment strategy is maintained to counter the volatility in interest rates, all the while taking advantage of trading opportunities in government securities. The returns of CFIFI are remarkably superior to the average rate of the 364-day Treasury bills and 360-day time deposit rate.
CFIFI vs 360D TD vs 364D T-bill
Lastly, Cocolife Dollar Fund Builder, Inc. continues to outperform its foreign balanced fund peers and its benchmark, primarily due to our continuous monitoring and retooling activities. Moving forward, we will remain on the lookout for trading opportunities to stretch the yields of the fund.
Note: C$FB is benchmarked against interpolated 9-year ROP yield (based on ROP 28 and ROP 31)
We are grateful for your continued trust and confidence in Cocolife Asset Management.
Sincerely,
Mr. Artemio A. Tanchoco, Jr.
President
This marks the second consecutive year that CFIFI has been recognized as the Philippines’ Best Fixed Income Fund by the International Finance Magazine, after receiving the trophy and plaque for the same award for 2019 in ceremonies in Bangkok, Thailand held last January 31, 2020. The International Finance Awards gala for 2020 awardees will be held in Bangkok or Dubai and is initially scheduled in January 2021.
