Unit Investment Trust Funds (uitf)

[jerzz]

Hi jerzz,

 

Kelan at saan?

 

Long time no see....

 

Regards,

 

Talley

 

Hi Talley

 

If we ask Dr PepPeR there, it will probably be Padrone's Cafe

 

As to when, will see

 

Just made a UiTF investment with no holding period. How do I know When to pull it out?

 

Regards too,

 

Jerzz

Edited January 17, 2007 by jerzz

[Dr_PepPeR]

Fishing Naturally, in a Fully Loaded Aquarium

 

Just made a UiTF investment with no holding period. How do I know When to pull it out?

 

 

Hi Talley

 

If we ask Dr PepPeR there, it will probably be Padrone's Cafe

 

As to when, will see

 

Just made a UiTF investment with no holding period. How do I know When to pull it out?

 

Regards too,

 

Jerzz

 

Actually, if it's coffee or lunch, I'd prefer somewhere in the Ortigas area, take your pick of Galleria, Megamall, Podium, Metrowalk or any hole in the wall there. We just will not be able to indulge Jerzz' fishing adventure.

 

If your UITF is in fixed income, you should pull it out when you think interest rates are about to go up. If it is in a balanced or equity fund, pull it out if you think there will be a slump in the prices at the stock market. If you think you want to cash in on your market gain, cash it in; if you also need the money badly, redeem your UITF funds.

[Talley]

Actually, if it's coffee or lunch, I'd prefer somewhere in the Ortigas area, take your pick of Galleria, Megamall, Podium, Metrowalk or any hole in the wall there. We just will not be able to indulge Jerzz' fishing adventure.

 

If your UITF is in fixed income, you should pull it out when you think interest rates are about to go up. If it is in a balanced or equity fund, pull it out if you think there will be a slump in the prices at the stock market. If you think you want to cash in on your market gain, cash it in; if you also need the money badly, redeem your UITF funds.

 

Hi Dr_Pepper,

 

Ortigas is also fine with me since I work in the area. Guess we'll just have to check when Jerzz is free.

 

Regards,

 

Talley

[anarkista]

Hi, Doc Pepper,

 

I hope you could help me on this one. I am really enjoying UITF. From Peso Bond Fund, I am now going to invest in Equity Funds. The return is definitely more significant than this current investment that I have – riskier, of course. I am basing my decision on history of equity funds of a number of banks – I checked ING, BPI, RCBC, IFund. They are all doing very, very well. The growth is so consistent. Here’s my question, what are the economic and financial ‘signs’ that I should look out to to guard my investment? Or would you say that this ‘question’ is actually a sign that I should not invest in equities yet (due to my lack of knowledge in the field)?

 

I would want eventually to move a step further: go into stocks directly. I kno there is no 'Stocks 101 for Dummies', but I hope you could give me suggestion (materials and references, probably) on how I could understand Stocks more. I am a Pol Sci major, by the way, and we did not discuss this in my class. :-)

 

Salamat ng marami!

 

(And I hope I could join your group in discussions like this one of these days.)

[Dr_PepPeR]

Hi Dr_Pepper,

 

Ortigas is also fine with me since I work in the area. Guess we'll just have to check when Jerzz is free.

 

Regards,

 

Talley

 

That would be really kewl! Looking forward to it!

[Dr_PepPeR]

Hi, Doc Pepper,

 

I hope you could help me on this one. I am really enjoying UITF. From Peso Bond Fund, I am now going to invest in Equity Funds. The return is definitely more significant than this current investment that I have – riskier, of course. I am basing my decision on history of equity funds of a number of banks – I checked ING, BPI, RCBC, IFund. They are all doing very, very well. The growth is so consistent. Here’s my question, what are the economic and financial ‘signs’ that I should look out to to guard my investment? Or would you say that this ‘question’ is actually a sign that I should not invest in equities yet (due to my lack of knowledge in the field)?

 

I would want eventually to move a step further: go into stocks directly. I kno there is no 'Stocks 101 for Dummies', but I hope you could give me suggestion (materials and references, probably) on how I could understand Stocks more. I am a Pol Sci major, by the way, and we did not discuss this in my class. :-)

 

Salamat ng marami!

 

(And I hope I could join your group in discussions like this one of these days.)

 

UITFs are performing very well now both finxed income and equity/balanced funds due to the strong economic fundamentals and the low interest rate scenario. Now is also a good time to enter since it is the Bangko Sentral's policy to keep interest rates low and the fundamentals of the blue chip companies are very strong, both circumstances of which are expected to continue up to the May local elections or the second quarter. If you are invested in an equity/balanced UITF, what you should monitor is the behavior of the blue chip companies or the PHISIX. Since the market value of these funds are tied to first liner stock prices, as long as the stock market is bullish, then you will earn a lot more than pure fixed income investments. When you can see that the stock market is about to slump, then it is time to take in profit. You can redeem your UITF unit before the slump and put it somewhere else or realize your profit and put back in your principal when the stock market goes down, again to take advantage of the low NAVPUs. When will there be a slump? Well, my own personal opinion is that it is the foreign investors who influence the market the most with the size of their investments as well as their ability to act quickly in terms of selling and buying. So anytime there is uncertainty in the country's economy or political climate, even by perception only, expect the stock market to be affected. For long terms holdings, you can't go wrong with looking at the fundamentals. If the blue chips are doing well, any drop in stock price is bound to be temporary. You can always wade into stock investing directly but with the volumes required to trade, you will have to work through a stock broker. Of course, this is only an opinion, and you know what they say about opinions.

[anarkista]

As always, you've been of great help, Doc Pepper. Have a nice day!

[parbust3r]

what uitfs would you guys recommend?

or mutual funds? Dr. pepper?

[Dr_PepPeR]

As always, you've been of great help, Doc Pepper. Have a nice day!

 

You're quite welcome sir, but please feel free to take what I say with a grain of salt. I don't claim to be an expert at anything.

[Dr_PepPeR]

what uitfs would you guys recommend?

or mutual funds? Dr. pepper?

 

What are your investment objectives? How long do you intend to keep it there? What is your risk appetite? How familiar are you with investments? The big reputable banks are good choices, and I would choose UITFs over mutual funds anyday. Well, for one, I am biased, second, mutual funds have higher operating costs which of course are borne by the investor, and thirdly, most mutual funds have their assets managed by the banks themselves.

[anarkista]

Sir/s:

When we say we have a 90-day minimum holding period, does this mean 90 banking days (thus, excluding Saturdays, Sundays, and Holidays)? Or does this mean 90 calendar days, hence, ~3 months?

[anarkista]

And pahabol:

If, for example, I redeemed all of my investment today, is there any legal prohibition before I can invest again? I mean, am I prohibited to invest for a certain period of time?

 

(Sorry, Sir Moderator, I added a reply because I cannot edit my previous post.)

[Dr_PepPeR]

Sir/s:

When we say we have a 90-day minimum holding period, does this mean 90 banking days (thus, excluding Saturdays, Sundays, and Holidays)? Or does this mean 90 calendar days, hence, ~3 months?

 

It refers to calendar days, or three (3) months.

 

And pahabol:

If, for example, I redeemed all of my investment today, is there any legal prohibition before I can invest again? I mean, am I prohibited to invest for a certain period of time?

 

(Sorry, Sir Moderator, I added a reply because I cannot edit my previous post.)

 

Of course, not, no legal prohibition and not even banking policy can prevent you from doing so. It's your money.

[parbust3r]

ive got free funds that i wont be needing for at least a year. should i put in in MF, UITF, or a time deposit?

analysts have different suggestions. some saying the equity market will continue to grow while others are saying that pre election jitters will bring the market value down.

what is your opinion on this Dr. Pepper?

 

personally, im a risk taker and id like to put it in a 100% equity mutual fund.

I dont know of any UITF that is 100% equity based.

 

thanks in advance DP.

[Guest lene]

What are your investment objectives? How long do you intend to keep it there? What is your risk appetite? How familiar are you with investments? The big reputable banks are good choices, and I would choose UITFs over mutual funds anyday. Well, for one, I am biased, second, mutual funds have higher operating costs which of course are borne by the investor, and thirdly, most mutual funds have their assets managed by the banks themselves.

 

hi dr. pepper,

 

i've been reading this thread and i must say that you are very knowledgable regarding the mechanics of the UITFs which are marked-to market. The advices you gave are sound and if people actually followed your trend of thought and invested in UITFs when the market was way down last May-June 2006, they would have made lots of money if they redeemed it now :cool:

 

However, I'm just curious- you said you would choose UITFs over mutual funds. I myself have both UITFs and mutual funds, both invested in fixed-income products and I must say the performance for both is more or less the same. Your third reason on why you prefer UITFs is because most mutual funds have their assets managed by the banks themselves. And the point is? UITFs are managed by the trust department of banks too right? If, at the end of the day, the performance would be more or less the same, I don't see any reason why mutual funds cannot be considered good investment alternatives.

 

Also, what is the effect on UITFs on the reserve requirement BSP policy on the pooled funds? Since the fund managers cannot invest 100%, will this have an effect on the yields being returned to investors? Do mutual funds have an advantage on this aspect since the funds managers can invest 100% of the funds in various products since they are regulated by SEC and not by BSP?

[Dr_PepPeR]

hi dr. pepper,

 

i've been reading this thread and i must say that you are very knowledgable regarding the mechanics of the UITFs which are marked-to market. The advices you gave are sound and if people actually followed your trend of thought and invested in UITFs when the market was way down last May-June 2006, they would have made lots of money if they redeemed it now :cool:

 

However, I'm just curious- you said you would choose UITFs over mutual funds. I myself have both UITFs and mutual funds, both invested in fixed-income products and I must say the performance for both is more or less the same. Your third reason on why you prefer UITFs is because most mutual funds have their assets managed by the banks themselves. And the point is? UITFs are managed by the trust department of banks too right? If, at the end of the day, the performance would be more or less the same, I don't see any reason why mutual funds cannot be considered good investment alternatives.

 

Also, what is the effect on UITFs on the reserve requirement BSP policy on the pooled funds? Since the fund managers cannot invest 100%, will this have an effect on the yields being returned to investors? Do mutual funds have an advantage on this aspect since the funds managers can invest 100% of the funds in various products since they are regulated by SEC and not by BSP?

 

Thank you for your comments ma'am. I am not really an expert, and as I've said, you are free to take anything I post here with more than a grain of salt.

 

Now that I've got that disclaimer out of the way, let me elaborate on why I would prefer UITFs because Mutual Funds have their funds managed by a bank anyway. The point is, banks do not do this service for free. If they are appointed by a mutual fund company to be their investment manager, then that company is charged a management fee. The mutual fund company then charges a management fee also to the client. Guess what, it is higher than what the bank charges the mutual fund company. Not that there is anything amoral to this, but this is just the way good business is done. So why incur a middleman charge when you can just go straight to the provider? As to performance, it may or may not matter, but it is logical to conclude that the more the expenses charged to the investor, the less net income an investor gets. Please feel free to assail my reasoning on this, but I am not discounting that mutual funds are good investment alternatives too. It really depends on what an investor wants.

 

The BSP reserve requirement on pooled funds only applies to Trust and Other Fiduciary Accounts - Others (in short TOFA-Others) and Common Trust Funds (CTFs). The BSP Circular requiring the move to UITFs specifically exempts UITFs approved by the BSP from any reserve requirements. Thus, UITFs can be fully invested in qualified investments and the yields go direct to the subscribers less trust fees and approved fund expenses. So mutual funds do not have this advantage at all. Until recently, their advantage was that they could quote indicative rates, something that is a no-no for marked-to-market fund valuation. BSP sends a team of auditors to audit each bank yearly. Can the SEC say the same for the mutual fund companies?

[Dr_PepPeR]

ive got free funds that i wont be needing for at least a year. should i put in in MF, UITF, or a time deposit?

analysts have different suggestions. some saying the equity market will continue to grow while others are saying that pre election jitters will bring the market value down.

what is your opinion on this Dr. Pepper?

 

personally, im a risk taker and id like to put it in a 100% equity mutual fund.

I dont know of any UITF that is 100% equity based.

 

thanks in advance DP.

 

Ahhh if only I had a crystal ball! But I don't so I may be more qualified to answer your questions in the 'other' Board. Anyway, if you have a year, I would suggest a short term UITF or Mutual Fund. Time deposit rates are ridiculously low these days, almost on par with special savings rate. If you really are a risk taker, you can take an equity or balanced UITF/MF. At this point, the blue chips have good fundamentals. Pre election jitters may bring the market down but if there are credible elections, then we should see the market recovering relatively swiftly, as the general economic picture is still good.

[Guest lene]

Thank you for your comments ma'am. I am not really an expert, and as I've said, you are free to take anything I post here with more than a grain of salt.

 

Now that I've got that disclaimer out of the way, let me elaborate on why I would prefer UITFs because Mutual Funds have their funds managed by a bank anyway. The point is, banks do not do this service for free. If they are appointed by a mutual fund company to be their investment manager, then that company is charged a management fee. The mutual fund company then charges a management fee also to the client. Guess what, it is higher than what the bank charges the mutual fund company. Not that there is anything amoral to this, but this is just the way good business is done. So why incur a middleman charge when you can just go straight to the provider? As to performance, it may or may not matter, but it is logical to conclude that the more the expenses charged to the investor, the less net income an investor gets. Please feel free to assail my reasoning on this, but I am not discounting that mutual funds are good investment alternatives too. It really depends on what an investor wants.

 

The BSP reserve requirement on pooled funds only applies to Trust and Other Fiduciary Accounts - Others (in short TOFA-Others) and Common Trust Funds (CTFs). The BSP Circular requiring the move to UITFs specifically exempts UITFs approved by the BSP from any reserve requirements. Thus, UITFs can be fully invested in qualified investments and the yields go direct to the subscribers less trust fees and approved fund expenses. So mutual funds do not have this advantage at all. Until recently, their advantage was that they could quote indicative rates, something that is a no-no for marked-to-market fund valuation. BSP sends a team of auditors to audit each bank yearly. Can the SEC say the same for the mutual fund companies?

 

Point well taken, Dr. pepper. Thank you for your insights; it really helps us investors and those who aren't really very knowledgable on this product could learn a lot from your posts. Even if you say its your opinion and peope have to take it with a grain of salt, I personally believe you are quite on the dot about most points. You obviously know the product very well

[Dr_PepPeR]

Point well taken, Dr. pepper. Thank you for your insights; it really helps us investors and those who aren't really very knowledgable on this product could learn a lot from your posts. Even if you say its your opinion and peope have to take it with a grain of salt, I personally believe you are quite on the dot about most points. You obviously know the product very well

 

Thank you. Very much appreciated!

[anarkista]

Thanks, Doc Pepper!

 

By the way, a number of friends are approaching and asking me about UITF. They are also interested. Still looking for more materials to understand further the industry.

[Dr_PepPeR]

Thanks, Doc Pepper!

 

By the way, a number of friends are approaching and asking me about UITF. They are also interested. Still looking for more materials to understand further the industry.

 

You might want to visit the officially sanctioned UITF Website. Here is their blurb:

 

We are proud to announce the launching of UITF Online (www.uitf.com.ph) on September 1, 2006.

 

UITF Online is a web-based Unit Investment Trust Funds (UITF) resource and information center conceived by the Trust Officers Association of the Philippines (TOAP) and implemented by a consortium of trust institutions that manage UITFs.

 

The website is a 24/7, globally accessible communication medium that disseminates relevant information on UITF such as product features, daily and historical NAVPUs, year-on-year and year-to-date ROI’s, and graphical presentations of the various managed funds in the market today.

 

UITF Online aims to:

 

· Generate awareness on the UITF as an investment alternative,

· Empower the investing public by providing them with free access to timely and truthful facts on the UITF in order to arrive at an intelligent investment decision,

· Establish channels of communication that will educate the investing public about UITF products and provide answers to frequently asked questions on the same; and

· Promote the trust institutions and their funds to the investing public.

 

Visit www.uitf.com.ph now!

------------------------------------------

 

Hope this helps!

[tonyp]

Hi, Doc Pepper,

 

I hope you could help me on this one. I am really enjoying UITF. From Peso Bond Fund, I am now going to invest in Equity Funds. The return is definitely more significant than this current investment that I have – riskier, of course. I am basing my decision on history of equity funds of a number of banks – I checked ING, BPI, RCBC, IFund. They are all doing very, very well. The growth is so consistent. Here’s my question, what are the economic and financial ‘signs’ that I should look out to to guard my investment? Or would you say that this ‘question’ is actually a sign that I should not invest in equities yet (due to my lack of knowledge in the field)?

 

I would want eventually to move a step further: go into stocks directly. I kno there is no 'Stocks 101 for Dummies', but I hope you could give me suggestion (materials and references, probably) on how I could understand Stocks more. I am a Pol Sci major, by the way, and we did not discuss this in my class. :-)

 

Salamat ng marami!

 

(And I hope I could join your group in discussions like this one of these days.)

 

The UITF returns are smaller compared to stocks. Should you intend to try the stock market it will be advisable to do it directly. You can join the on-line trading of Citiseconline. They offer free seminars which teach you what to invest and what to avoid.

[tonyp]

Sir/s:

When we say we have a 90-day minimum holding period, does this mean 90 banking days (thus, excluding Saturdays, Sundays, and Holidays)? Or does this mean 90 calendar days, hence, ~3 months?

 

Although there is a holding period, most funds allow you to get out before the maturity date. What you should pay attention to is the penalty rate to get out. It ranges from 1/4 of 1% to 5%. Avoid those that restrict your flexibily by imposing a high penalty rate. Based on my experience, 1/4 of 1% allows you to park you funds better than a time deposit. They key is to monitor the NAV on a daily basis.

[anarkista]

Although there is a holding period, most funds allow you to get out before the maturity date. What you should pay attention to is the penalty rate to get out. It ranges from 1/4 of 1% to 5%. Avoid those that restrict your flexibily by imposing a high penalty rate. Based on my experience, 1/4 of 1% allows you to park you funds better than a time deposit. They key is to monitor the NAV on a daily basis.

 

Thanks, Sir, for your comments. I will take note of these. :-) I am checking the Citiseconline site now... Are you trading here?

[Dr_PepPeR]

The UITF returns are smaller compared to stocks. Should you intend to try the stock market it will be advisable to do it directly. You can join the on-line trading of Citiseconline. They offer free seminars which teach you what to invest and what to avoid.

 

The other alternative is of course balanced or equity UITFs for those who want to have their funds invested primarily in the stock market. The stock market is doing very well right now. There is still always one rule of investments that you have to remember, the greater the potential return, the greater the risk.