ETFs vs. Mutual Funds: Investing in US Stocks from the Philippines!
Channel: ZIGGING by Mark Sigg
Date: 2022-01-30

Why is investing in an ETF better than investing in bank-run UITF? Many of my videos on this channel have focused on UITFs (Unit Investment Trust Funds) and Mutual Funds run by banks and fund management companies, especially when looking to invest in the global markets. Several videos ago, I even shared a lengthy comparison among 8  Philippine bank UITFs that are set to mimic the performance of the US Stock Market. As bank-run funds, these have been the de facto for Filipinos wanting to get some exposure in the global markets in the last few years. Personally, I have been invested in the BPI US Equity Feeder Fund, BPI European Equity Feeder Fund, the BPI-ALFM Global Mutli-Asset Income Fund, the ATRAM Global Technology Feeder Fund, the ATRAM Consumer Trends Fund, and the the ATRAM Global Financials Feeder Fund. These funds, as well as those mentioned in my bank UITF video, all have target funds that are run by foreign banks and fund management companies abroad such as Vanguard, Morgan Stanley Capital Inc (MSCI), Blackrock's iShares, and SPDR to name a few. While banks have obviously been the de facto in investing in global markets for Filipinos, it is no longer the only way. Banks are not even the cheapest and easiest way to do this now!

Get $2 FREE on Gotrade via http://bit.ly/gotradegozigg

With the advent of new investing apps such as Gotrade and Etoro, we Filipinos can no invest in the mentioned target funds or ETFs for as little as a few dollars. But first, what are ETFs anyway? As the name suggests, Exchange Traded Funds, are funds pooled from retail investors and run invested by investments professionals in the said banks/fund management companies. ETFs can be made up of stocks, bonds, commodities, and recently, even cryptocurrency! Inherently, ETFs are similar to UITFs and Mutual Funds, but there is one glaring difference that sets ETFs apart: it's EXCHANGE-TRADED. Yes, these funds are being traded in the global markets alongside other stocks. As such, trading them comes with buying and selling precision that we could not previously do with Mutual Funds or UITFs. Whereas buy and redeem positions in Mutual Funds and UITFs are dependent on cut-off periods rather than the actual trading price, ETFs allow us the precision to enter or exit a trade with a specific price in mind. Mutual Funds and ETFs operate through pre-determined cut-off periods so what you're actual chasing would be placing in orders by a certain time rather than the actual buying/selling price. You're at the mercy of however way the market swings by the end of the trading period so it's a game of uncertainty. With ETFs, you can better can control your price entries and exits as long as you're wiling to stay up in local Philippine time to participate in the US trading hours, you can trade your ETFs with this precision.

I invest in ETFs through Gotrade and Etoro and I have a lot of other vides on my channel comparing the performance of these two. For this video, I'll only go into specifics in terms of the minimum investment amount to open an account and the the minimum amount in taking on positions. For Etoro, they've recently lowered the minimum investment amount from $250 to just $50 now.  And unlike banks that would require you to open a savings account but have the minimum amount remain untouchable to maintain the average daily balance, the said minimum amount to open an EToro account remains available for use. Even better, the funds are available for use at minimum trade positions of just $10. On the other hand, the minimums for Gotrade are even lower at just $10 to open an account and $1 for each investment. Comparing investments via EToro and Gotrade to Philippine banks and fund management companies, the invesment barrier is much lower. Even the cheapest US Equity UITF from ATRAM is at a minimum investment of P1,000 to open and for subsequent top-ups is much higher when compared to Gotrade.

Aside from the price specificity, Gotrade and Etoro don't charge any trust fees. Whereas Philippine banks and fund management companies charge up to 1.5% per annum for UITFs and Mutual Funds, these platforms do not charge the said fees!

With all these advantages of ETFs, have I gone ALL-IN in ETFs? Actually, no. I take my investing with a lot of prudence so I am careful of these new investment apps which are just a few years in operation. Presently, I have about 30% of my global investments via EToro and Gotrade while the remaining 70% remain with banks. Why? Aside from the better feeling of safety, having them in banks enable me to include them in my bank statements which are useful for travel visa applications, loans, or other monetary purpose. 

As always, a balanced approach to risk is what I've employed in diversifying funds in different platforms.


US Equity UITFs study: https://youtu.be/djWcOn5U9uM
Gotrade Review: https://youtu.be/eFHaogkOhcE

#gotrade
#etoro
#etf