Unit Investment Trust Fund (UITF)

According to UITF Philippines website, UITF is an open-ended pooled trust fund denominated in pesos or any acceptable currency, which is operated and administered by a trust entity and made available by participation. Each UITF product is governed by a Declaration of Trust (or Plan Rules), which contains the investment objectives of the UITF as well as the mechanics for investing, operating and administering the fund. Most UITFs are considered medium- to long-term investments. Clients considering to invest in UITFs must have the financial resources to stay invested in them for a reasonable period of time in order to maximize earnings potentials. If the funds to be invested will be needed by the client in the immediate future, the UITFs may not be a suitable investment vehicle for such client.

Each UITF is established, administered and maintained in accordance with a written trust agreement or “plan” drawn by the trust entity, approved by its Board of Directors, and approved by the Bangko Sentral ng Pilipinas (BSP). UITFs are governed by BSP Circular 447 whose goals are to align the operation of pooled funds under management by trust entities with international best practices and to ensure differentiation of such pooled funds from bank deposits and other direct liabilities of financial institutions. The UITFs are also governed by BSP Circular 593, which defines the industry standards for UITF client suitability assessment and risk disclosures.


It is thus apparent that UITFs are highly regulated and trust entities offering these are closely supervised by BSP to ensure investor protection.

Same with mutual fund, investors money are put on pool so that fund manager can invest it in a more complex investment products like government securities, bonds, the stock market and many others.

When you invest your money in UITF, share is computer per unit, hence they use Net Asset Value Per Unit(NAVPU). Let’s say you have 100K and you invested in UITF with unit price of 1 peso, then you have 100 thousand units on your account. Bank will then issue certificate about your investment which you have to surrender upon selling of your units.

There are also management fees involve in UITF, same with mutual funds. It ranges from around 1% to 2%, which also depends on the bank you want to invest in. You can also pull out your fund anytime you want, but some banks may incur fees for early withdrawal like within a year or 6 months period.

UITF are offered by major banks in the Philippines. Each of them have different fund packages offered to their prospective clients. Depending on your risk appetite, you can choose which one suits you. Most of the UITF available in the banks have minimum  Php 100K investment, except BDO who allows minimum Php 10K opening investment.

This is also a long term investment vehicle. If you will consider this option, try to invest your money for a period of minimum 5 years to get the best out of it. There are risk involve as most of this funds are tie up to the market. However, the risk will be minimize by the number of years it will remain invested.


UITF Investment

BDO for example, offers 9 UITF funds as below:

BDO Peso Money Market Fund
BDO Peso Bond Fund
BDO Peso Fixed-Income Fund
BDO Peso Balanced Fund
BDO Equity Fund (EPCIB Equity Fund)
BDO Dollar Money Market Fund
BDO Dollar Bond Fund
BDO Medium Term Dollar Bond Fund (EPCIB US Dollar Fund)

You cannot open UITF account while abroad. All you have to do if you want to open an account is to visit the bank that offers it. Most major banks in the Philippines offers it, you can inquire to them.

Here’s the various Peso Equity UITF’s gain for the last 5 years in comparison with different provider.

(Source: www.pinoymoneytalk.com)
(Source: www.pinoymoneytalk.com)


Do you have UITF investment in your portfolio? Share your insights in the comment.



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