Financial investing does not come naturally to most Filipinos. For so many years, Filipinos have placed their savings in fixed return instruments such as savings and time deposits because for many years, interest rates in the Philippines were very high. Surely, the default behavior of the average individual with regards to their savings is to be risk averse. Most Filipinos are not just risk averse, they hardly take the extra time to understand the relationship between risk and return.

Fortunately for Augusto ”Gus” Cosio, President of First Metro Asset Management Inc. (FAMI), he was able to learn the nuances of the risk reward principle early in life. While still in the university, he joined an investment club that pooled their money together to invest in the stock market. “Supply and demand and all that stuff just piqued my interest at that age,” he says. Since he learned to understand markets, he knew that the possibility of losing money was part and parcel of the investing game.

Gus had worked with in the off-shore banking unit (OBU) of a European bank in Manila, but in 1983, the Ninoy Aquino assassination brought turmoil to the local finance industry, he thought his career was headed to a dead end. “That incident caused the acceleration of capital flight such that later on that year, it was discovered that the now defunct Central Bank of the Philippines – which was eventually replaced by Bangko Sentral ng Pilipinas (BSP) – had used up all of its reserves and called moratorium on all foreign debt payments. So, I went overseas to seek for a brighter future.”

Moving to Hongkong was a risky proposition. It was an international financial center where people from all over the world came to do business. It was very competitive. Fortunately for Gus, after a few job interviews, he was offered a position in the bond trading desk of a major European bank. He worked in Hong Kong for six years as a dealer in the international fixed income market. The same bank posted him to Singapore where he further developed his skill as an investment professional. After spending ten years overseas, he and his family started to feel homesick and since prospects had become brighter in the Philippines, they decided to come home.

Getting Back to His RootsIn the mid 1990s, the domestic capital market was starting to grow again. IPOs (Initial Public Offerings) had become numerous and were causing the equities market to gain depth and breadth. He went on to become the president of a stock brokerage firm, a subsidiary of a large bank for four years. Late in the decade, the region was hit by the Asian financial crisis and the local equities market had started to contract. Business had slowed down for stock brokers. Fortunately, he was recruited back to Hong Kong to do fund management for a mid-sized European bank. The stint did not last very long because the bank where he was working was acquired by a larger European bank.He returned to manila and did consultancy work in the oil and business process outsourcing (BPO) industries. At the same time, he was resource speaker in continuing education courses on financial markets at the Ateneo Graduate School of Business.

It was also during this time that Gus became involved in the mutual fund industry. “If you look at the mutual fund business now, this is not yet a widespread business so when I took over at FAMI a little over five years ago, which was immediately after the 2008 global financial crisis, it was really difficult to ask people to invest. It seemed riskier because there was greater volatility – no promised return; only anticipated return over a period of time.” It

was a situation when risk was seen to be the highest, but history has shown that it was a time when returns were also at their peak.

Gus believes that FAMI from the very start is the only company that sees their business as a corporate social responsibility. FAMI has a strong advocacy for investment literacy, i.e. understanding financial markets, understanding value and risk, price and risk, and the all important risk reward relationship.

Financial LiteracyAs part of the cause, FAMI conducts investment literacy talks and seminars in different places in the country throughout the year. FAMI speakers go regularly to places like San Fernando City in La Union, General Santos City in South Cotabato, Angeles City in Pampanga, Ormoc City in Leyte, Iloilo and Bacolod, among others to impart investment concepts and strategies to people from all walks of life. They also promote this advocacy through their websites and other social networking sites such as Facebook and Twitter. Even their giveaway calendars have information about mutual funds and how to invest, among others. “We decided to use the calendar as a tool to educate people,” Gus says.

In partnership with the Catholic Education Association of the Philippines (CEAP), the national association of Catholic educational institutions in the Philippines, FAMI gets invited to speak in regional and national assemblies of member schools. “We talk about our funds and how to invest,” he says. “One of the burdens of FAMI’s founders was that teachers were falling victims to numerous scams. Not understanding the relationship between risk and return, they easily fall prey to naysayers who promise enormous returns for as short as a few months. They think that when a large return is promised, it can automatically be gained.”

Our task in FAMI as investment professional is to make people understand how the market produces the risk reward relationship. “Admittedly, it is difficult to understand, but unless we reach out to the small savers, they will always be the target of unscrupulous purveyors of financial scams.”

“In FAMI, we don’t promise fixed returns. We only tell investors that they can take advantage of returns that are available in the market because the company understands the risks it takes and the possible rewards in can reap with prudent.” FAMI is pursuing plans to expand their market share, broaden their reach so that their assets under management can grow bigger. “We need to grow so that our business will be sustainable for a long period of time,” he says.

The Fulfillment, Frustration, and the FutureAs President, the most fulfilling part of his work is when investors come back to tell him that the funds did well for their or their company’s investments. The frustrating part, on the other hand, is when people approach him and complain to him about their losses. “There are more people who panic but they need to remember that investing is not just a free ride,” he says. “There are no free lunches. You need to pay for it through

sacrifice, hard work and perseverance. Investing involves time and patience.”

As part of FAMI’s plans, Gus hopes to double their customer base. He says, “We have over 44,000

investors right now – mostly individuals – and we plan to have 100,000 investors in the next two years.”

For those who are afraid of investing in mutual funds, he has this to say: “Fear of not investing is a result of lack of understanding. When you

understand the investment process, the fear is greatly reduced. When you understand the risk-reward relationship, you can overcome any temporary anxiety. Get advice from licensed professionals who have a good track record to back up their advice. This is what we offer in FAMI mutual funds.”

Promoting Investment LiteracyBy Excel V. Dyquiangco

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Maybank.indd 5 2/6/15 4:24 PM