Long-term investing in Philippine equities is a game of compounding. To win, blend sensible structure with a few high-impact habits. Start by deciding your anchor: a passive index core or an active quality-and-dividend tilt. Many investors do both—using FMETF or broad equity index funds as ballast, then layering handpicked names with superior economics.
Quality is non-negotiable. Look for high return on invested capital, recurring cash flows, and competitive moats: distribution networks, scale in retail, bank deposit franchises, or hard-to-replicate property land banks. Conglomerates with multiple growth engines can dampen single-segment shocks.
Set a contribution system. Peso-cost averaging reduces the urge to time entries. Pre-commit to add during volatility; when the PSEi falls 10–20%, tilt scheduled buys slightly higher, provided your emergency fund is intact. This keeps you rational when fear is highest.
Income accelerates compounding. Philippine dividend payers and REITs offer steady cash yields. Reinvest distributions by default. Track payout ratios, debt profiles, and lease tenors for REITs; quality assets with strong sponsors often weather cycles better. Map distributions against your target income rate, adjusting allocation as life goals evolve.
Valuation discipline protects the downside. Use a quick triad: earnings trajectory (5-year CAGR), valuation (P/E vs sector average), and balance sheet (net debt/EBITDA). For banks, monitor NPL ratios and capital adequacy. For property, check pre-sales, take-up rates, and recurring income share. Avoid paying growth multiples for cyclical earnings.
Manage concentration risk deliberately. Limit single-stock exposure (e.g., max 8–12%) and sector caps (e.g., financials under 35%). Thin liquidity in smaller counters can trap capital; size positions accordingly and use limit orders. Keep a small cash buffer to exploit dislocations.
Be cost-aware. Philippine trades incur stock transaction tax on sales plus fees; dividends are generally subject to final withholding for residents. Fewer, higher-conviction trades reduce drag. If you dollar-cost average, negotiate fee-friendly broker plans or consolidate orders on a set day each month.
Think in decades but measure quarterly. Maintain a living thesis document: three reasons you own, three reasons you’d sell. Revisit after each earnings season. If a position breaches your reasons-to-sell (structural moat erosion, governance red flags, sustained cash burn), exit decisively and redeploy.
Macro matters, but only so much. Remittances, inflation, policy rates, and build-out cycles influence sector leadership—banks and property tend to benefit from expansionary phases, while defensives like utilities and consumer staples anchor during slowdowns. Positioning around these tides can help, but don’t abandon core principles to chase narratives.
Currency is the wild card for foreigners. The peso’s path can amplify or dampen returns. Hedge selectively or diversify globally if FX swings keep you from sleeping well.
The PSE rewards investors who combine fundamentals with emotional steadiness. Build a resilient mix of index exposure, quality dividend growers, and REIT income; add methodical contributions; and let time do its compounding work.
