Thursday, July 30, 2020

Invest in Foreign and International Stocks with new Sun Life Prosperity World Equity Index Feeder Fund

Whether you’re looking to strengthen your portfolio through diversification or create new avenues to explosive growth, international stocks can be an excellent component in your overall investment strategy. While it is undeniable how Covid-19 pandemic has affected the entire world, speculation around the projected global market impact of the virus continues to evolve. And trends have emerged around industries experiencing growth despite the pandemic and the challenges that come with sudden high demand. Across the world, uncertainty around Covid-19 has coincided with lower growth and tighter financial conditions. And this impact is already visible and felt in countries like the Philippines, one of the countries most impacted by the virus. Global foreign investments have also projected to decline by 40% in 2020. This could cause lasting damage to global production and supply chains.

The extent of the global market impact depends on how quickly the international community can mitigate the spread of the virus and somehow reboot their economies. And so will the recovery of the hardest-hit industries, like travel, tourism, retail, and hospitality. While the spread of Covid-19 is certainly having cascading impacts on several industries, others are seeing significant growth. 

E-Commerce as a whole is booming. But the impacts of COVID-19 on online shopping vary greatly from one industry to the next. Filipinos have turned to online shopping and food deliveries to help them weather quarantine. Unsurprisingly, many companies seeing unprecedented growth solve consumers’ stay-at-home needs without a heavy reliance on physical, cross-border supply chains. Mobile app downloads and usage have been growing quickly across the board. People under quarantine have looked for digital alternatives to their out-of-home activities and for new ways to stay entertained. For some companies, the pandemic-driven increase in demand has come with increased scrutiny. So it’s been essential for them to pivot quickly to allay consumer fears and maintain brand sentiment. 

Rapid expansion for international economies, increased productivity, and improving standards of living are leading to the rise of a new global middle class, and these trends suggest that the world’s most dramatic growth over the next century. With more than a thousand publicly traded stocks in the global market, why not venture into international stocks? Contrary to the belief of others, investing in international stocks can reduce your risk--and may even bolster your gains. When you're just learning how to invest in stocks, going global may seem daunting. But it needn't be. 

I recently attended a webinar about the latest product from Sun Life Prosperity called Sun Life Prosperity World Equity Index Feeder Fund. This coincides Foreign markets present opportunities you’d miss out on if your holdings were strictly limited to Philippine-based stocks. While non-domestic companies sometimes come with added risk factors, international stocks also tend to be cheaply valued relative to comparable businesses in other parts of the globe. 

World Equity Index Feeder Fund [WEIFF] aims to track the performance of the MSCI and ACWI. WEIFF invests at least 90% of its asset in a target fund. It allows investors to use their Philippine pesos to access the global markets. So what are the benefits of making an investment with Sun Life Prosperity World Equity Index Feeder Fund? 

  • You can invest in companies worldwide. You can buy stocks from more popular companies like Apple, Nestle, Alibaba, Facebook, and Amazon. 
  • You have access to global stock market for a minimum of P50,000. 
  • Diversify globally for long-term growth.

Before investing in international stocks, consider how much risk you’re comfortable taking on and whether you want to invest in developed economies, emerging markets, or both. While emerging markets grow faster, they also tend to be more volatile. By establishing clear, realistic goals for your non-domestic investments, you’ll be in better shape to ride out bouts of market turbulence and pursue long-term gains.

It is important to invest in a fund that matches your long-term horizon. Capitalize on stocks in developed and emerging markets. Diversify your investment portfolio. Enjoy potentially high returns. Get closer to your long-term financial goals.

Once you feel comfortable dipping your toes into foreign waters, build up the international portion of your portfolio slowly — perhaps through dollar-cost averaging, a strategy of regularly buying an investment, irrespective of its price.

You know the idiom: Don’t put all your eggs in one basket. This advice is especially important when investing, because diversification is important, e
ven though we live in an increasingly interdependent global economy, stock  returns. 

Investing and trading in stocks is a good starting point for Filipino investors. Even though local stocks has its advantages, it still pales in comparison to foreign stocks in terms of profits. This is where Filipinos feel limited when investing—the lack of opportunity for global investments. It’s no wonder given the many benefits of foreign over local investments.

Having a foreign portfolio investment allows investors to participate in a global diversification of portfolio assets. Investors who hold stocks in various countries are likely less susceptible to the vulnerable market movements over their portfolios. This opens the door for higher risk-adjusted returns.

Despite being a broader industry than the local landscape, foreign markets set a less competitive playing field. In turn, having an international credit (for foreign investments) and international portfolio diversification reduces risks and boosts your gains.

To yield long-term growth, your investments are placed into the MSCI All Country World Index (ACWI). So how is this new product from Sun Life different from Sun Life's World Voyager? With World Voyager, although it is also a dollar space, it is actively managed. WIEFF on the other hand, has passively managed fund but it is also an efficient way to invest offshore.

How much amount is needed to invest in the Sun Life Prosperity World Equity Index Feeder Fund (WEIFF)? The minimum initial investment is only P50,000 while the minimum additional investments is P10,000. The new Sun Life Prosperity World Equity Index Feeder Fund (WEIFF) is fit for investors with an aggressive risk appetite, who are looking for long-term capital appreciation.

In a nutshell, they would put our capital into a large overseas fund that invests in global stocks. In my personal opinion, as I listened to the webinar conducted by Sun Life Philippines, I think Filipinos need a more aggressive risk tolerance and have always thought about global investing. These are the few marketplaces where we can put our money to work without much hassle. 

Of course, it's crucial that we study the economic conditions first and weigh our investment principles, goals, costs, and prospective gains before we dive head-first.

The spread of COVID-19 has thrown the global market into a state of flux. Countries are in varying stages of coping with the pandemic and its fallout. And while some industries are clearly coming out ahead in the current situation, that success can come with significant challenges.

As the world settles into its “new normal.” Everyone will adjust to the halfway point between life as they’ve known it and their new tech-dependent, virtual existence. As that happens, localization and user experience will become crucial to meeting their evolving expectations and driving brand growth.

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