Fund Managers All Stars: Maria Theresa Marcial-Javier and Fernando Sison III
Maria Theresa Marcial-Javier, Senior Vice President, BPI-Asset Management & Trust Group
Fernando Sison III, President, BPI Asset Management Inc. and BPI Investment Management Inc.
UITFs: ABF Philippine Bond Index Fund (6.79%) | Philippine Dollar Bond Index Fund (16.48%)
MUTUAL FUNDS: Philippine Stock Index Fund Corp. (59.51%) | ALFM Growth Fund (63.97%)
Your funds have been performing quite well recently. To what do you attribute this?
Maria Theresa Marcial-Javier (MTJ): Diversity and innovation. We have the widest array of products and investment solutions in the market to suit varying risk appetite of our institutional and retail clients. Innovation has been one of our strengths, having pioneered index funds, the first to manage mutual funds in the industry. We have capitalized on the strength of our over 800 strong distribution networks, spanning the entire Philippines with focus on the growing markets in key urban cities.
For instance, we have a complete line of mutual funds and unit investment trust funds (UITFs), some of which are actively managed to provide highest risk-adjusted returns. We also have a range of index funds that allow an investor to continue to remain fully invested in the markets despite short-term volatilities if his/her investment horizon is long-term.
Fernando Sison (FS): We’re also proud of our team of highly skilled investment and trust practitioners and state of the art infrastructure support. We attribute our year-to-date performance to stock selection as we made an overweight call in the cyclical sector.
Do you foresee the recent the stock market run-up to continue for the rest of 2010?
FS: Definitely, we are relatively upbeat on the outlook for local equities, with the following as growth drivers: a) 10%-15% corporate growth b) a firmer and continuing global recovery, and c) market liquidity. Though it is likely that investors may opt to be more cautious as we near the May elections, we expect the run-up to continue as long as the results are credible and transparent. Despite concerns over a possible election failure scenario, we are looking at an orderly transfer of power, as has been the case in past elections.
What kind of funds will do well in this environment?
MTJ: A diversified global bond fund should do well in the current environment. With the economic recovery gaining ground and risk appetite growing, credit should still provide some gains. However, we would have to be more selective in the credits. Global bond supply should still be relatively robust and there is still a lot of dollar liquidity.
FS: Those focused on growth and value, like our own ALFM Growth Fund.
What sectors are likely to emerge as star performers this year? Which sectors one should avoid at this point of time?
MTJ: We continue to prefer the power, property and consumer sectors. Underweight telco and mining sectors.
What is going to be the biggest theme for investment funds in 2010?
FS: It is still diversification and consistency in delivering the highest risk-adjusted returns for our clients. A well balanced portfolio is important to capture positive returns with a relatively low degree of volatility and high level of capital preservation.
MTJ: Riskier assets, e.g., equity, may be a major play given the relatively low bond yields and market liquidity.
What’s your advice to investors for this year?
MTJ: Remain invested in the markets, but diversify holdings (in fixed income and equities) appropriate to risk tolerance and investment horizon. Diversify your investments in fixed income and equities (considering risk profile).
How would you describe your investment philosophy?
FS: Our investment philosophy is anchored on the principle that we have a fiduciary responsibility to our clients to exercise prudence and conservatism in the management of their funds. We make sure that we match our clients’ reasonable return objectives with their respective risk profile and unique investment constraints. We base our asset allocation decisions on our clients’ investment policy statements and are closely monitored as part of our risk management process.
MTJ: For our institutional clients, we have developed model portfolios that are aligned with their general investment requirements. These asset allocation models, which reflect our strategic and tactical investment strategies, are reviewed on a regular basis to align with our investment outlook.
FS: Also our prudent management of clients’ funds, guided by value orientation and portfolio diversification. And strategic allocation based on top-down approach while stock allocation based on bottom-up approach.
In a nutshell, how do you go about selecting which securities to buy?
MTJ: Asset allocation based on the portfolio investment objectives, risk tolerance, and investment horizon gives the initial guidance on the investment universe for a particular portfolio. The IPS also helps define the benchmark, target risk metrics and any other investment constraints. The security selection process starts with top-down analysis, an economic and financial markets review/outlook. Then we drill down to country/industry exposures and then security selection.
FS: For fixed income, factors used in the selection include absolute yield levels, spreads, credit and counterparty risk, liquidity risk, interest rate and price volatility, as well as expected currency and yield movements. We have a wide range of accredited counterparties/brokers that allow us to tap various markets. We favor the use of fundamental valuations.
What are your favorite investment tools for picking stocks and/or bonds?
MTJ: Bloomberg analytics and charts. A combination of fundamental and technical analysis.
What has been the worst investment mistake you have ever made and what did you learn from it?
FS: Not being fully invested in equities during 2nd-3rd quarter of 2009.
Who do you consider your idols and mentors in the investing world?
MTJ: George Soros for his ability to trade different assets classes.
What best investment advice have you read or been given?
FS: Diversify. Cost averaging over a long investment period.
MTJ: Buy when there is blood in the streets.
Which investment- or business-related book would you consider your investment bible?
MTJ: CFA curriculum.
FS: When Markets Collide.
Maria Theresa Marcial-Javier, Senior Vice-President, currently heads BPI Asset Management which manages over P460 billion of assets under management. She is also the chief investment officer responsible for overall investment and risk management strategy for various investment mandates including domestic and foreign currency fixed income and equities for institutional and individual portfolios, mutual funds and unit investment trust funds (UITFs).
Tere started as an economic policy researcher at the National Economic and Development Authority before joining BPI. She completed an Executive Education Program, the CFA (Chartered Financial Analyst) Institute Investment Management Workshop, at Harvard Business School in Boston, Massachusetts in 2006. She received The Asset’s Most Astute Local Bond Investor award in 2006 and Most Outstanding Alumnus of UP Los Baños in 2003.
She is currently the president of the Fund Managers Association of the Philippines (FMAP), and vice-president and chair of legal and regulatory committee of the Trust Officers Association of the Philippines (TOAP).
Fernando J. Sison III graduated from the Ateneo de Manila University with an A.B. in General Studies with an Honorable Mention. He completed his M.B.A. with the University of the Philippines. He previously served as the head of many of BPI’s departments, including AMTG, Securities Distribution Group, and Corporate Finance Group. He is also currently the President of BPI Asset Management, Inc. and BPI Investment Management, Inc.
Dojo served as President of the Investment Company Association of the Philippines (ICAP) in 2003, 2004, and 2006 and currently sits in the Board of Directors. He is also the treasurer of the ALFM Peso Bond Fund, ALFM Dollar Bond Fund, ALFM Euro Bond Fund, ALFM Growth Fund, ALFM Money Market Fund, and Philippine Stock Index Fund.