How Pandemic Affects Mutual Fund

How Pandemic Affects Mutual Fund A lot of countries including the Philippines are affected in this pandemic caused by Covid-19 disease. The world is experiencing grieves and burdens especially in a global economy where we already facing tough times before pandemic came. Due to the implementation of community quarantine in various parts of the country, […]

How Pandemic Affects Mutual Fund

A lot of countries including the Philippines are affected in this pandemic caused by Covid-19
disease. The world is experiencing grieves and burdens especially in a global economy where
we already facing tough times before pandemic came. Due to the implementation of community
quarantine in various parts of the country, many companies and businesses were forced to have a
temporary closure. This is to prevent the spread of the virus to people which carries Covid-19 disease.
The shutdown of companies, businesses, and even tourism impacts the economic growth of
the country.

Since then, many Filipinos are into a financial investment which is called Mutual Funds.
So what is a mutual fund? It is an investment company that pools together money from different
investors. They use the money in buying shares, stocks, and money market. It is simply entrusting
your money on someone and expecting to grow over time.
Here are the different types of mutual funds:

 Equity Funds
These are typically used to invest in stocks. Equity funds invest in the shares of different
companies to make a profit. Some equity funds may even target specific sectors for stock
investment.

 Bond Funds
Also known as a debt fund, you use this type of mutual fund for beginners to invest in bonds
and other debt instruments to generate monthly income for investors. In general, bond
funds only require a minimum investment.

 Balanced Funds
It is a mix of bonds, stocks, and other securities. Balanced funds are also known as hybrid
funds because it aims to make a profit by investing in a combination of various mutual fund
types. Typically, balanced funds are composed of 60% stocks and 40% bonds.

 Money Market Funds
This type of mutual fund only invests in high-quality, short-term instruments like cash and
cash-equivalent securities. In general, money market funds invest in certificates of deposits
(CDs), treasuries, bankers’ acceptances, and repurchase agreements.

Reference: https://www.moneymax.ph/personal-finance/articles/mutual-funds-
philippines#:~:text=Essentially%2C%20mutual%20funds%20are%20professionally,stocks%2C%20and%20other%20invest
ment%20products.&text=By%20pooling%20your%20funds%20with,investment%20trust%20funds%20(UITFs).

Because of this pandemic, there are some discussions and speculations about financial aspects.

In some articles, they have witnessed debt fund investors suddenly pulling out and selling their
investments. This is because investors doubt the company’s profitability and stability to repay their
obligations with these funds. Businesses are losing potential customers almost every day, because
of fear of leaving their houses.

 

So here’s the question, is pandemic has a big impact on mutual funds?
The answer is yes. A pandemic can heavily impact mutual funds as well as the fund industry.
After the government implements extensive community quarantine, about 80% of
economic activities are ceased and closed down. Companies and businesses are shutting down their
operation and some laborers decide to go back to their hometowns. If a company does not generate
profit and still paying the expenses such as rent, utilities, and employees’ salaries, then its finances
and earnings will get impacted. There is also a big change in customer’s behavior and decision
making. One does not know when people are starting to go shopping or buy refrigerators, television, or
cars just like we used to see before.

Conclusion:
No one can predict when the economy will restore and recover through this pandemic. If you think
on the positive side, you will realize that after every crash, there is always a recovery. A cure and
medicine for Covid-19 are nearly found and now under observation. Our life will go back to normal as
well as the economy.

Right now, we advised everyone to keep calm and before redeeming your investments, take time to
think for a long term possibility. After three years, you will now forget the things that happen
today. We know that market crashes and highs are part of the investment journey, so use your time
to be ready and prepared.