Diary Of An Investment Fund (Part Two: Following A Fund Manager’s Footprints)
12 January 2008"The hardest thing to explain is the glaringly evident which everybody had decided not to see. "
- Ayn Rand
We should all be so lucky to have an inside peek at a portfolio manager’s playbook. However, I found a way to estimate the trading moves of major funds based on publicly available information. Most investment funds open to retail investors publish monthly fact sheets. Typical content of a fund fact sheet would be key statistics like the following:
In addition to the above, funds also publish a summary of the investments the fund has as of the period end, which can also be found on the fact sheets:
With the above information, using two openly available pieces of information: a) the fund’s Net Asset Value, and b) the percentage allocations by sector and stock, it is then possible to extrapolate a table such as this:
Take note that this table is just an estimate based on Net Asset Value. In reality, the fund’s assets will be larger since NAV is the difference between the fund’s assets and liabilities. However, in the case of most institutional stock market funds, liabilities account for a negligible (3% or less) percentage against total assets, so a fund’s NAV is practically the fund’s asset base (see 2006 ICAP survey table). This is also because of local regulations which prevent funds from using leverage to trade with.
Our case study will be the ING Philippine Equity Fund, which is also the source of the fact sheet information on top. The ING Fund is a UITF managed by ING Investment Management. Against most institutional funds it is relatively young: starting in 2003 as a Common Trust Fund (CTF) and converting into UITF in 2004. However, in 2005 it has grown to become the largest equity fund operating in the Philippine Stock Market. Based on 2006 records it had net assets of Php3.2 billion—larger than Philam Strategic Growth (Php1.2B), Philequity (Php1.4B), and GSIS Kinabukasan (Php1.8B). By December 2007, the net assets of ING Philippine Equity Fund had grown to a staggering Php8.1 billion.
So surely the monthly movements of the largest institutional equity fund would have an impact on our market, and it might be an instructive exercise to have a look at how it fared in 2007.
At this point, some small disclaimers before I continue. As of this writing:
- I have never nor do not currently work for ING Investment Management
- I have formerly held shares in some of ING’s products but I do not currently have any
- It is not my intention to endorse or solicit specific investments
- My presentation and inferences in this article are based on information that was made publicly available by ING Investment Management through their website
- I do not guarantee the accuracy nor the veracity of the information
- I am making this presentation for illustrative and educational purposes only
- It is not my intention to imply that ING’s transparency with information is above the norm that can be expected in the UITF industry, however I am using their information for the simple reason that it is available to be used
With that out of the way, we can now begin our diary.
Next: Diary Entries
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