Did you ever wonder how you can invest in popular U.S. companies such as Apple, Facebook, and Amazon? The BPI U.S. Equity Index Feeder Fund is one way. If the BPI Philippine Equity Index Fund mirrors the PSEi (Philippine Stock Exchange Index), the BPI U.S. Equity Index Feeder Fund aims to track the performance of the S&P 500 Index, an American Stock Market Index. Both UITF’s collect pools of cash from individuals and invest in companies found in the 2 indexes. If you missed my post on the BPI Philippine Equity Index Fund, you can read it here.
The PSEi is composed of 30 of the largest companies in the Philippines, while the S&P 500 Index is composed of 500 of the largest companies in the U.S. Below is the list of the top ten holdings of the BPI U.S. Equity Index Feeder Fund as of July 31, 2018:
The table on the right shows the performance of the fund on a cumulative basis, annual basis, and calendar year basis. If you invested in the BPI U.S. Equity Index Feeder Fund when it was launched last Aug. 2014, your money would have grown by more than 40% (S.I. – since inception in table). This fund gives you extra diversification if you already have investments in local Philippine stocks, especially when the local stock market is down. However, there are still some concerns an employee like myself must consider before investing in the BPI U.S. Equity Index Feeder Fund:
- The minimum initial investment is $1,000 – This is 5 times the initial investment for the BPI Philippine Equity Index Fund.
- The minimum additional investment is $500 – This makes it hard to do cost averaging, since someone like me could probably afford to add to the fund once a year.
- Allocation – Since this fund tracks 500 U.S. companies, the allocation for each company is small. The fund allocation for Apple, Inc. is around 4%, meaning that only 4% of what you invest in the fund goes to Apple, Inc.
- Steady but Limited Returns – Remember, these are 500 of the biggest companies in the U.S. Investing in them is different from buying the stock at IPO (initial public offering).
I am not currently invested in this fund. But as an equity fund, this is an option for your long term goals, such as retirement or a college fund. Warren Buffet himself said that index funds are a smart investment that make sense for two reasons: Index funds are inexpensive and aren’t tied to the success of one single entity. The trust fee for the BPI U.S. Equity Index Feeder Fund is 0.75% p.a., while the trust fee for the BPI Philippine Equity Index Fund is 1% p.a. Weird.
If you want to invest in the BPI U.S. Equity Index Feeder Fund, all you need is a dollar account from BPI, at least $1,000, and an investment account. You can open an investment account by visiting their website or in your bpiexpressonline account.