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#41 pogingpogi

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Posted 08 June 2006 - 05:44 PM

galing talaga ng mga bros natin sa mtc sir talley sir Dr. pepper maraming salamat sa inyo...got very worried for those hard earned cash kase sana nga maging normal na kagad ang situation...

#42 Dr_PepPeR

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Posted 09 June 2006 - 12:51 AM

galing talaga ng mga bros natin sa mtc sir talley sir Dr. pepper maraming salamat sa inyo...got very worried for those hard earned cash kase sana nga maging normal na kagad ang situation...

<{POST_SNAPBACK}>


Glad to be of help sir. Don't panic, understand that you're in there for the long haul.

#43 veamucho

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Posted 09 June 2006 - 06:30 PM

Glad to be of help sir. Don't panic, understand that you're in there for the long haul.

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Dr. Pepper...

Very informative indeed :cool: . Keep up the good work. Akala ko sir, dun ka lang sa wholesome topics eh...hehehe.

#44 Dr_PepPeR

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Posted 11 June 2006 - 12:51 PM

Dr. Pepper...

Very informative indeed :cool: .  Keep up the good work.  Akala ko sir, dun ka lang sa wholesome topics eh...hehehe.

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Ooooopsss! Wala pong bukuhan hehehe, newbie po ako dun kaya ako naman tulungan nyo pow.

#45 pogingpogi

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Posted 13 June 2006 - 08:18 PM

salamat basta kung may matutulong ako ...pm lang heheh

#46 bRIX

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Posted 13 June 2006 - 11:25 PM

@dr pepper

i'm seriously considering pulling out in my fixed income fund to cut my losses. from what i heard, it would take 2 years for UITFs to recover again. furthermore, there's no indication as of the moment that NAVPS will go up anytime soon. :(

#47 Dr_PepPeR

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Posted 14 June 2006 - 09:49 AM

salamat basta kung may matutulong ako ...pm lang heheh

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Marami po kayo matutulong. Thanks!

#48 Dr_PepPeR

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Posted 14 June 2006 - 10:05 AM

@dr pepper

i'm seriously considering pulling out in my fixed income fund to cut my losses.  from what i heard, it would take 2 years for UITFs to recover again. furthermore, there's no indication as of the moment that NAVPS will go up anytime soon. :(

<{POST_SNAPBACK}>


No sir, that is not true. The NAVPUs are based on the market prices of the securities (usually fixed income GS and corporates) and the recovery of course would depend on how soon will the market price of the assets go up. When will this be? Well certainly not tomorrow nor in a week or two but no one can tell. Two years? Maybe but not probable. Look at it this way. Your UITF assets at this point probably consists of cash (10-20%) and the rest will probably be government securities and a few corporate notes like SM Prime, Ayala Corp/Land etc. Now, think what will happen if you just held on to that until everything matures. You will get your principal plus the income it earned right? What I'm saying is if the assets inside your UITF are solid, why realize your loss now just because market prices are low? Why not just wait till the NAVPU goes back up at least to the NAVPU when you subscribed (and it will eventually) then go out if you have to or just keep it in till you see a better NAVPU?

I just wish the person who got you into UITF explained the mark-to-market thing fully with you as well as the concept of the UITF. Of course, you do what you have to do, and if you feel you need to pull out now, that is really your call. I hope this helped.


#49 veamucho

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Posted 14 June 2006 - 11:25 AM

No sir, that is not true. The NAVPUs are based on the market prices of the securities (usually fixed income GS and corporates) and the recovery of course would depend on how soon will the market price of the assets go up. When will this be? Well certainly not tomorrow nor in a week or two but no one can tell. Two years? Maybe but not probable. Look at it this way. Your UITF assets at this point probably consists of cash (10-20%) and the rest will probably be government securities and a few corporate notes like SM Prime, Ayala Corp/Land etc. Now, think what will happen if you just held on to that until everything matures. You will get your principal plus the income it earned right? What I'm saying is if the assets inside your UITF are solid, why realize your loss now just because market prices are low? Why not just wait till the NAVPU goes back up at least to the NAVPU when you subscribed (and it will eventually) then go out if you have to or just keep it in till you see a better NAVPU?

I just wish the person who got you into UITF explained the mark-to-market thing fully with you as well as the concept of the UITF. Of course, you do what you have to do, and if you feel you need to pull out now, that is really your call. I hope this helped.

<{POST_SNAPBACK}>



if I may add...

selling at this time would benefit the bank since they can purchase your UITF at a low price...eventually, when the NAVPU appreciates - the bank gains by selling the shares at a higher price.

funds invested in UITFs and Mutual Funds should always be excess cash and the outlook should be long term. pahabaan talaga ng pasensya ngayon kasi wala pang signs na pataas na ang NAVPU...

as explained by Dr. Pepper, wait for the bonds to mature and we realize our gains - time is our friend in this kind of investment.

#50 Talley

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Posted 14 June 2006 - 12:01 PM

For those in a quandary on what to do with their UITF/Mutual fund placements, here are some things to consider.

First, you should be aware that the short-term prognosis for the bond market is still quite negative. By this I mean that interest rates will probably still go up and that means lower NAVS/NAVPU in the short term. How much will it go down? No one really knows as it will greatly depend on how much interest rates go up.

With that in mind, ask yourself if you can absorb another 5 to 10% loss in your money's value in the next 2 months or so. If you can't then you should seriously consider exiting now --- especially if the money you placed into the fund was meant for something else (house payments, tuition). If you can take that loss, then the best action may be to just ride this out and maybe even add to your placement to take advantage of the lower prices.

Now, as to when will things turn around, that will depend on two major things -- the skill of the fund manager and the nerves of the investors. In times like this, a good fund manager can actually make a killing as he can balance his portfolio in such a way that it's returns can be maximized. However, his ability to do this will be greatly affected by the nerves of his funds investors. Simply put, any amount that he has to set aside to cover for sudden withdrawals is an amount that he can't use to buy the higher yielding bonds. In essence, the lesser the amount withdrawn by nervous investors, the better the performance of the fund in the long term.

#51 Dr_PepPeR

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Posted 14 June 2006 - 02:47 PM

Thanks for chiming in, Veamucho and Talley! You both made great points!

Edited by Dr_PepPeR, 14 June 2006 - 02:47 PM.


#52 bRIX

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Posted 18 June 2006 - 09:05 AM

i got this from a mailing list. just to make the discussion more interesting.... :lol:

HI, I'm not really a finance person or something. But if anyone is interested, here's what I think.

First, the trend of the UITF is going down. What's the point of holding on to your investment if the trend is going down? You are just making your floating loss bigger and harder to recover. The most logical move is to cut loss as soon as you see the trend. That way you confine your losses to a smaller smount (compared to if you hold on to it)and can easily re invest when you see an uptrend. The amount you have to recover (loss in previous trade) will be smaller thus giving you the chance to profit in later trades.

Second, I don't think I will invest in bond funds again. Why? Unlike before when they are using the accrual method, the interests were credited to the fund when available thus creating a regular uptrend, now because of this "mark to market" system of pricing the NAVPU, trding in bond funds is like trading in stocks or worse like in futures (commodities). In fact it is even worse. In stocks, you can hold on to your worthless share papers but still receive dividends and know that if you hold on to an undervalued company, even if they close, you get the real value of the company. In bond funds, your worthless share paper is really worthless. Similar to trading in commodities, your money is what you have in your account or certificate. But at least in commodities, one can "hedge" or short sell when the trend is down. In this bond fund, you just rut.

Who can win in UITF? I believe just the government, the banks and prrobably the big investors. The small investors might as well put their money in lotto. For them it is always 50-50 chance.

Basically, in bond funds, if the interrest rate of bonds are going up the NAVPU will go down. This is because it is marked to market. If the fund is holding a fund with a 7% interst and the trend of the
interst is up say 10%, those in the market for bonds will not buy said 7% bond for the same price. They will have to offer it at a "discount" or lower price and therefore the downtrend in NAVPU.

But who is in charge of this interest rate? The government. Remeber they don't have to actually increase the rate, the investors need only to perceive that they will be increasing and it can affect the market already. Who knows more about interest rates going up or down? the Banks and probably the big investors who have the diligence to look into the investments of the funds they are buying.

Think of this scenario. The government reduces the interest rates, so the NVPU starts going up. The banks, the big investors come in at once. The more the NAVPU increases because of the buyers appetite.
Here we come the small investors shaking at the present uptrend out to have our own profit. So the government gives a press release that interest rates are going up or the banks aware that the government is accepting higher interest rates sees the trend at one, the big investors too aware of all the economic data are the first to unload at the peak price. The banks get their share, the big investors too,
and the government very happy to buy back their bonds at a discount. And wham! The NAVPU takes a dive. The small investors scrambling to get out but too late - as always.

Just remember even in UITF, just like in stocks and commodities, there are buyers and sellers. The burned money do not "disappear". They just change hands. For every investor crying themselves to
sleep because of their losses, somewhere out there is another opening champagne bottles because of their winnings.

Commodities can be manipulated, Stocks can have insider trading, but this bond fund UITF basically depends on one thing - interest rates- and who can and will control this interest rates?

For me, it is like taking candy from little children.

Of course I can be wrong.


Edited by bRIX, 18 June 2006 - 09:09 AM.


#53 veamucho

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Posted 18 June 2006 - 05:58 PM

i got this from a mailing list. just to make the discussion more interesting....  :lol:

<{POST_SNAPBACK}>



it is a common strategy for stock investors to set a loss limit (say eight to ten percent of the buying price)...meaning, if market price drops to a certain amount, the investor sells and waits for a good time to invest again...

as to M2M, it is a conservative approach of valuing our investments and this is the best practice. though, what really is lacking in the Philippines is a Bond Exchange (similar to the PSE)...or am I wrong? in the absence of an exchange, valuation may seem subjective as nobody knows how UITF/Mutual Funds compute for NAVPU/NAVPS...

#54 veamucho

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Posted 18 June 2006 - 06:13 PM

For those in a quandary on what to do with their UITF/Mutual fund placements, here are some things to consider.

First, you should be aware that the short-term prognosis for the bond market is still quite negative.  By this I mean that interest rates will probably still go up and that means lower NAVS/NAVPU in the short term.  How much will it go down? No one really knows as it will greatly depend on how much interest rates go up.

With that in mind, ask yourself if you can absorb another 5 to 10% loss in your money's value in the next 2 months or so.  If you can't then you should seriously consider exiting now --- especially if the money you placed into the fund was meant for something else (house payments, tuition).  If you can take that loss, then the best action may be to just ride this out and maybe even add to your placement to take advantage of the lower prices.

Now, as to when will things turn around, that will depend on two major things -- the skill of the fund manager and the nerves of the investors.  In times like this, a good fund manager can actually make a killing as he can balance his portfolio in such a way that it's returns can be maximized.  However, his ability to do this will be greatly affected by the nerves of his funds investors.  Simply put, any amount that he has to set aside to cover for sudden withdrawals is an amount that he can't use to buy the higher yielding bonds.  In essence, the lesser the amount withdrawn by nervous investors, the better the performance of the fund in the long term.

<{POST_SNAPBACK}>



if I have excess funds, I will invest more, but gradually...just to lower my average cost. in time or when NAVPU appreciates, those investments during the low months would bear fruit - making my losses smaller and my overall portfolio's return better.

kaso ubos na eh (hehehe...) sarap pa naman pumasok ngayon kasi mababa na prices...

#55 Dr_PepPeR

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Posted 19 June 2006 - 11:46 AM

i got this from a mailing list. just to make the discussion more interesting....  :lol:

<{POST_SNAPBACK}>


HI, I'm not really a finance person or something. But if anyone is interested, here's what I think.

Disclaimer: I am also not a finance person which means I don't have an MBA, CFA or other finance/business degree nor am I a fund manager. I just happen to be in the trust industry.

First, the trend of the UITF is going down. What's the point of holding on to your investment if the trend is going down? You are just making your floating loss bigger and harder to recover. The most logical move is to cut loss as soon as you see the trend. That way you confine your losses to a smaller smount (compared to if you hold on to it)and can easily re invest when you see an uptrend. The amount you have to recover (loss in previous trade) will be smaller thus giving you the chance to profit in later trades.

I would think it depends on whether you need the cash ASAP. If you do, then it makes sense to cut losses. If not, then going out now will result in realized losses. At some point in time, your NAVPU will go back to par especially if you are in a bond fund. The assets of a bond fund are normally government securities and no government likes to default on its obligations.

Second, I don't think I will invest in bond funds again. Why? Unlike before when they are using the accrual method, the interests were credited to the fund when available thus creating a regular uptrend, now because of this "mark to market" system of pricing the NAVPU, trding in bond funds is like trading in stocks or worse like in futures (commodities). In fact it is even worse. In stocks, you can hold on to your worthless share papers but still receive dividends and know that if you hold on to an undervalued company, even if they close, you get the real value of the company. In bond funds, your worthless share paper is really worthless. Similar to trading in commodities, your money is what you have in your account or certificate. But at least in commodities, one can "hedge" or short sell when the trend is down. In this bond fund, you just rut.

The mark to market system enables an investor to get greater returns than simply principal plus interest. The job of the fund manager is to actively manage the fund so that over the investment horizon (normally 1 to 3 years), the investment will earn better than money market rates. Yes there are risks but remember that the greater the potential return, the greater the risks. If you are risk averse, don't go into UITF, stick to Time Deposits or T-Bills. The UITF is really intended for long term investors, where time becomes an investment friend. Stocks do not guaranty dividends, it all depends on retained earnings and the Board of Directors. Just look at what are the assets in the UITF, and you will get an idea of what you will get at the end of the investment horizon.

Who can win in UITF? I believe just the government, the banks and prrobably the big investors. The small investors might as well put their money in lotto. For them it is always 50-50 chance.

I don't see how the government wins in the UITF. The big investors? They have better things to do with their money than put it in UITF. The UITF really replaces the CTFs or common trust funds and are really for the small investors. Come on, a 50-50 chance in lotto??? If you believe this, you might as well go to the casinos with your money and take your chances there.

Basically, in bond funds, if the interrest rate of bonds are going up the NAVPU will go down. This is because it is marked to market. If the fund is holding a fund with a 7% interst and the trend of the
interst is up say 10%, those in the market for bonds will not buy said 7% bond for the same price. They will have to offer it at a "discount" or lower price and therefore the downtrend in NAVPU.

But who is in charge of this interest rate? The government. Remeber they don't have to actually increase the rate, the investors need only to perceive that they will be increasing and it can affect the market already. Who knows more about interest rates going up or down? the Banks and probably the big investors who have the diligence to look into the investments of the funds they are buying.

Uhm, interest rates are determined by a lot of things, both macro and micro. No one really knows how interest rates will behave, particularly over the long term. It is still subject to market forces. The government may try to intervene to pursue a fiscal policy but they are not in charge of what the interest rate will be.

Think of this scenario. The government reduces the interest rates, so the NVPU starts going up. The banks, the big investors come in at once. The more the NAVPU increases because of the buyers appetite.

Here we come the small investors shaking at the present uptrend out to have our own profit. So the government gives a press release that interest rates are going up or the banks aware that the government is accepting higher interest rates sees the trend at one, the big investors too aware of all the economic data are the first to unload at the peak price. The banks get their share, the big investors too,
and the government very happy to buy back their bonds at a discount. And wham! The NAVPU takes a dive. The small investors scrambling to get out but too late - as always.

Just remember even in UITF, just like in stocks and commodities, there are buyers and sellers. The burned money do not "disappear". They just change hands. For every investor crying themselves to
sleep because of their losses, somewhere out there is another opening champagne bottles because of their winnings.

Commodities can be manipulated, Stocks can have insider trading, but this bond fund UITF basically depends on one thing - interest rates- and who can and will control this interest rates?

Sigh, just see the above.

For me, it is like taking candy from little children.

UITFs are not for everyone. What is important is knowing what you are getting into. Some banks, especially one of the big ones, have been remiss in educating their clients. Their branch managers sold the UITF too aggressively. If you are the type who computes your interest earned daily, then you should stay away from UITFs.

Of course I can be wrong.

And that applies to me too.

#56 bRIX

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Posted 19 June 2006 - 10:33 PM

thanks again Dr Pepper for your valuable insights regarding this topic. :)

i decided not to pull out my UITF.... well, not yet. good thing it's just excess cash that i can afford not to spend. :)

here's a question: why does UITFs took a large dip in terms of it's NAVPU compared to Mutual Funds (e.g. Philequity) which seems to be gaining or at least able to maintain a steady NAVPS?

#57 Dr_PepPeR

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Posted 20 June 2006 - 09:39 AM

thanks again Dr Pepper for your valuable insights regarding this topic. :)

i decided not to pull out my UITF.... well, not yet. good thing it's just excess cash that i can afford not to spend. :)

here's a question: why does UITFs took a large dip in terms of it's NAVPU compared to Mutual Funds (e.g. Philequity) which seems to be gaining or at least able to maintain a steady NAVPS?

<{POST_SNAPBACK}>


I know its not your letter bro, it was actually very easy to reply to. Pulling out is a personal decision. Like you said, if it is excess cash, then it might be better to wait. If you think you need it for better things, then you can always pull it out anytime. My fund manager tells me that it may take until next month for NAVPUs to go up and will probably not hit the previous highs experienced last April.

The UITFs that were really hit were the bond funds, the UITFs that were primarily invested in fixed income instruments. If a UITF or mutual fund was invested primarily in equities/stocks, then they would be doing relatively better since rising interest rates caused the UITF Bond Funds NAVPUs to go down.

Some mutual funds are still using the accrual system, so the NAVPUs are not that volatile.

Sorry, I'm not that familiar with Philequity, I assumed that it was a balanced (about half in stocks, half in fixed income) fund or an equity fund (more than 50% invested in stocks).

Hope this helped.


#58 CodenameV

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Posted 20 June 2006 - 10:50 AM

I've been reading this thread as i have invested some of my funds in UITF's (Metrobank Starter and BDO $ Money Market Fund). I pulled out from from my Metrobank starter when the NAVPU started going down because of the selling of the banks of their Long term bond holdings. I was able to go in 3 months ago at 1.09 and it went as high as 1.15 before it started going down. I was able to go out at 1.12 and it is now at 1.09. It really helps to monitor the NAVPU's of your funds daily.
BDO $ Money Market Fund on the otherhand is still doing well so i am staying put.
What's good about UITF's is that you can choose the type of fund that is aligned with your risk and return profile. The one thing i got from my Investment management course during my MBA classes in UP is that returns are commensurate to the amount of risk taken. UITF's have a higher rate of return than low risk investments like time deposits because they do have an element of risk.
For people who like to make their own choices with regards to the UITF that meets their risk return profile, I recommend BDO based on their performance and variety of choices.
For a review of the performance of the various trust products, Businessworld comes out with a supplement every Monday which shows the performance of the various trust investments available.

Edited by lurker252, 20 June 2006 - 10:52 AM.


#59 pogingpogi

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Posted 20 June 2006 - 09:52 PM

share ko lang may kabarkada kami sa bdo suggest niya sakin to pull out my bondfund and then ilipat sa mega savings mas ok daw to...kase parang time deposit siya kada buwan like ngyon month is 5.5 % kase talaga daw bababa ang bondfund kase madami nagwithdraw eh........share ko lang

#60 Talley

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Posted 21 June 2006 - 10:54 AM

share ko lang may kabarkada kami sa bdo suggest niya sakin to pull out my  bondfund and then ilipat sa mega savings mas ok daw to...kase parang time deposit siya kada buwan like ngyon month is 5.5 % kase talaga daw bababa ang bondfund kase madami nagwithdraw eh........share ko lang

<{POST_SNAPBACK}>


Good day pogingpogi,

Would just like to clarify your statement regarding BDO's mega savings. Is that rate 5.5% per month? That would translate to over 60% a year and is kinda shocking.

If it is true, is the rate guaranteed?

Thank you.




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