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The Sun Life Prosperity Dollar Abundance Fund (SLP DAF) has been re-launched by the Sun Life Asset Management Co., Inc. (SLAMC), from a dollar-denominated fixed income or bond fund to a balanced fund. This, while more and more domestic mutual funds has been focusing on the foreign-currency funds.

Ben Thomas P. Pañares, chief operating officer of SLAMC said, “The value of dollar savings in the Philippines reported amounts to some $20 billion, and it fair to say that we want a piece of that.”

As April 2009, the total value of all foreign-currency denominated mutual funds, which are managed by various fund managers, was P10.2 billion. Assets under management (AUM) within the mutual fund industry has a total value of P61.8 billion as of end of April.

There are 10 foreign currency-denominated mutual funds at present, 8 of these are US dollars denominated, while 2 are euro-denominated. With the exception of SLF DAF, all foreign currency-denominated funds are bond funds.

The difference is that bond funds, or fixed income funds, have lower risk yet a lower return on investment too. Balanced fund, on the other hand, are a mix of bond funds and equity funds, which make it a high return, high risk investment.

Mutual funds that are foreign currency-denominated, are invested mostly in dollar denominated ROPs.

SLAMC’s SLF DAF is the first foreign currency mutual fund in the country that is a balanced fund. Which means that, 60 percent of the fund is invested in dollar-denominated bond funds, and the 40 percent in dollar-denominated equity funds.

Pañares said that they are expecting to US dollar to perform better than peso ultimately. The forecast is an exchange rate between P51 to P53 to $1 by end of 2009. He added that local investors could see it (SLF DAF), as a medium to diversity their dollar-denominated portfolios from ROP’s to dollar-denominated investments from foreign mutual funds.