GUEVARRA INSISTS, though, that the Philippines is not doing poorly in enforcement compared to neighboring countries. He says that in a recent regional conference, he discovered that the Philippines had been able to detect and stop the operations of such recent Internet-based scams like those of FrancSwiss and Performance Investments Products Corporation (PIPC) ahead of other countries. Guevarra declines to name those countries in deference, he says, to his counterparts there. But he credits the quick action of the Philippines to the existence of the National Law Enforcement Coordinating Committee (NALECC), which has various government agencies meeting monthly and thus coordinate anti-crime and anti-fraud efforts.

Guevarra cites the PIPC case, which had the NBI immediately conducting surveillance work that led to the identification of the systems administrator and the formal filing of a lawsuit. He says surveillance work is still ongoing on FrancSwiss, although it has already been slapped with a cease-and-desist order.

Guevarra adds that the perception that nothing has been done about previous investment fraud cases is incorrect. Cases from early 2000 have resulted in convictions under the offenses of estafa and syndicated swindling, he says. The principal in the Multitel International investment scam, for instance, is still in jail, he points out, while cohorts in the Matteo Management Group case are also behind bars, though its principal remains at large. As far as he knows, adds Guevarra, some other cases were resolved through settlement with the complainants.

Lucban, meanwhile, says that the SEC currently has “four to five” pending cases before the Department of Justice against companies that were involved in investment fraud, apart from the charges of estafa and swindling filed separately against them by the NBI. Yet while he says current laws are sufficient, constant vigilance is still required to detect the new forms of investment scams. “The rules are in place,” he says, “but the key is monitoring.”

Investment managers also say that detecting a scam does not require much experience or expertise; all it takes is good old common sense. “If something sounds too good to be true, it usually is,” admonishes one fund manager. He warns that if an investment scheme offers to pay a much higher interest rate than what a bank would slap on a loan, then one should be on guard.

“Common sense comes in because you must ask why that entity would want to incur a higher cost in borrowing your money when they can get it for much less elsewhere,” says the fund manager. He says that as a basic rule of thumb, short-term investments usually yield lower and not higher returns. This is because responsible investment institutions absorb all the risks for its investors.

First Grade Investment Holdings Managing Director Astro del Castillo, for his part, says it is wise for an investor to “Google” a company and check its past performance, the types of instruments it invests in, and its track record. Or one can just stick to companies that have had their performance written about and already have known track records. Business papers publish and regularly make a comparison of the performance and rates of return of accredited mutual fund companies.

FOR THOSE with P50,000 and up to spare, fund managers recommend looking into mutual funds. Here, the money of small investors are pooled together and invested in a wider variety of financial instruments, which they would ordinarily not have access to if they were investing on their own because of the high investment amount required. Especially in these times when both spouses are busy working and earning for the family, a mutual fund can help couples decide where to invest their money, and monitor the investment for them, while they continue to work and increase their savings.

While time deposits deliver an average yield of two percent to three percent per annum, mutual funds give an average return of three percent to 20 percent a year, depending on the amount of risk one is willing to take. The basic rule is, high-risk investments like stocks, offer the highest possible returns. But with it comes the uncertainty of how much profit one could make, and the potential to even lose some of one’s investment.

Paul Joseph Garcia, president of the Fund Managers Association of the Philippines, says the recent decline in interest rates has lowered the expected profit from bond funds. “Unlike the double-digit returns of the past two years,” he says, “we expect the average returns going forward to likely be in the mid to high single digits.” By comparison, he expects profit from equity funds to be in the mid-teens in the medium term, and forecasts that it would be the best performer in terms of returns in the next three years. Annual returns from a balanced fund will likely be in the lower teens at present, he says, adding, “Assuming equal proportion, the returns would be somewhere at midpoint of a bond fund and an equity fund.”

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