Frequently Asked Questions - Mutual Funds

FAQs - Mutual Funds

A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. It is essentially a diversified portfolio of financial instruments - these could be equities, debentures / bonds or money market instruments. The corpus of the fund is then deployed in investment alternatives that help to meet predefined investment objectives. The income earned through these investments and the capital appreciation realized are shared by its shareholders in proportion to the number of shares (NAVPS) owned by them. Thus, a Mutual Fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. A mutual fund can make money in two ways: 1) the security can pay dividends and interest to the fund; or 2) A security can rise in value.

Net Asset Value is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset value of the scheme divided by the number of units outstanding on the Valuation Date.

The value or price at which investors could subscribe or redeem the shares of a mutual fund.

NAVPS is computed:
NAVPS = Total Value of Fund Assets - Total Liabilities
Number of shares Outstanding

The NAV is updated at the end of trading day. What this means is that your purchase will be based on the updated NAV at the end of the trading day, and published only on T+1. Because of this, you may not know the exact NAV at the time you subscribe or redeem your shares.

Mutual funds are a mix of bonds, stocks, and other financial instruments. When you buy or sell a mutual fund, you’re also buying and selling a combination of bonds, stocks, and other financial assets. Returns will depend on the condition of the markets represented by the mutual fund.

Mutual funds aim to reduce the volatility of returns by placing in different types of investment thus inherently balancing risk across various outlets. Investor of mutual funds, attain the benefit of diversification as mutual funds are invested in a wide range of securities.

Professionally Managed
Mutual funds are managed by professional fund managers who analyze the market which stocks and/or bonds to buy or sell in the portfolio of a fund on a daily basis. Your small investment is represented by the number of shares you hold in one of the many investors in the fund and the price for each share is called Net Asset Value Per Share (NAVPS).

Investors can sell their holdings in mutual fund investments anytime without worrying about finding a buyer at the right price.

Low Cost
There is no “Front – end” fee (fee that is being charged upon initial investment). Moreover,since mutual funds are a pool of money of many investors, the amount of investment made in securities is large and therefore can command a lower (fee) charge.

Prices of open ended mutual funds are declared daily. Regular updates on the value of your investment are available. The portfolio is also disclosed regularly with the fund manager's investment strategy and outlook.

Mutual funds are highly/well regulated by the Securities and Exchange Commission (SEC) and function under strict regulations designed to protect the interest of investors.

No. Mutual fund gains are exempted from taxes based on the Comprehensive Tax Reform Package. This was done to promote long-term savings in the country.

Equity Funds
Funds which are invested in stocks listed in the Philippine Stock Exchange.

Bond Funds
Funds composed of debt instruments issued by the Governemnt or Private Corporation.

Balanced Funds
Funds are allocated on both stocks and bonds.

Money Markets
Funds are invested in short-term time deposits, corporate bonds, treasury bills and government securities.

Type of Funds

As a general rule, Mutual Funds do not offer guaranteed returns to investors. As an investor, you should note the risk and returns of the fund you invested in. All returns depend on the following factors: the amount of money you invested, market conditions, and the strategy of the fund manager.

Minimum initial investment is at only P5,000.

Redemption price is the price received by the customer on selling units of an open-ended scheme to the fund. If the fund does not levy an exit load, the redemption price will be same as the NAV. Theredemption price will be lower than the NAV in case the fund levies an exit load.

Redemption must be settled to the respective clients account within T+7days. If you redeem within the holding period, you are subject for an early redemption fee this will be automatically deducted from your proceeds. Redemption fees are computed as follows:

Gross Proceeds = No. of Shares Redeemed x Navps
Net Proceeds = Gross Proceeds x (1 – Exit Fees)


Mutual fund charges a fee for portfolio management on an annual basis is calculated as a percentage of net assets under management.

  1. Log-in your ABCapitalSec account and click on the Mutual Fund tab on the upper right side.
  2. Click on the INVEST tab.
  3. Select a transaction type.
  4. Click on Fund Code to choose a mutual fund.
  5. For buy orders (Subscribe), place your desired investment amount (note: order must comply with minimum investment amount of a fund).
  6. For sell orders (Redeem), place the number of shares you want to redeem (note: order must comply with minimum redemption amount of a fund).
  7. Click on Preview Order to show a summary of your order so that you may review the particulars of the order before it is sent.
  8. Once you are ready, you must enter your password then press Place Order to submit the order for posting.
  1. Go to the VIEW INSTRUCTIONS tab, select “PENDING” then choose the desired instruction to be cancelled and click the CANCEL INSTRUCTION.
  2. Enter your password then click Cancel Order. Note that you may only cancel orders before they are sent to the fund providers at the specified dealing cut-off time.
  3. Instruction cut-off time is 11:00am.

*Note: Only Pending (status) Instructions can be Cancelled.

  1. Go to the VIEW INSTRUCTION tab, select “PENDING” then choose the desired instruction to be modify and click the EDIT INSTRUCTION.
  2. Input the revised amount that you want to buy or the revised number shares that you want to redeem.
  3. Enter your password and click Modify Order. Note that you may only modify orders before they are sent to the fund providers at the specified dealing cut-off time.
  4. Instruction cut-off time is 11:00am

*Note: Only Pending (status) Instructions can be Modify.

The cut-off time in Subscription and Redemption orders is 11:00am. Any orders submitted 11:00am onwards shall be processed the next banking day.

Subscriptions or redemptions received on or before the cut-off period will be processed based on the NAVPS for that business day.

*Note : AB Capital may share your personal information to selected Fund Providers upon Initial Investment. For Details on AB Capital's Privacy Policy, please see the company's Privacy policy here.

  • Shares purchased under FAMI will be rounded down to the nearest whole number.
  • Shares purchased under SLAMCI will be rounded off to the nearest whole number.

Orders placed within the cut-off period, confirmation of orders will be sent via email in the succeeding business day. Otherwise, orders submitted after the cut-off period will be processed in the next business day and confirmations from these will come the day after.