History of Philippine Mutual Fund


Under RA 2629 (Investment Company Act), Trinity Shares was the first company to register in August 1969 and began selling its shares publicly in October of the same year. In a span of 4 months, the company opened 11 branches, doubling its sales each month and its value appreciated to as much as 27% in the 4th quarter. Mr. Arthur B. Sokolow, the prime mover behind the fund, was able to convince Ka Doroy not only to invest in the new fund, but also to sit as director. Trinity’s success led to the registration of other funds, such as the Pacific and Malayan Funds owned by Alfonso Yuchengco and Ting Roxas’ Bancom.

While such companies continued to thrive, the equity market remained thin. This was further aggravated by the political instability brought about by the dawning dictatorial regime, punctuated by the “1st quarter storm”. Eventually, this led to capital flight and a 30% dive by the Manila Stock Exchange. Given the heavy dependence of industry to the latter, mutual funds, part or all equity, thrive or die with the stock market. The absence of other investment outlets limited the sense of diversification of funds then. As a result, the Securities and Exchange Commission totally banned the sale of mutual funds in 1973.

This death blow to the mutual fund industry led Trinity Shares, Malayan and Pacific Fund to stop operations. To date, Pacific and Malayan remain dormant. Trinity Shares was acquired by PDCP in 1979 and was eventually bought by Philamlife in 1993.

Evidently, the failure of the mutual fund industry decades ago can be attributed to the following factors: 1) lack of government regulation; 2) deteriorating political and economic condition of the country; 3) the absence of alternative investment vehicles; and 3) an undeveloped equity market.