Unit Investment Trust Funds (uitf)

[tonyp]

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

 

Am a member. You can sign up for a free trial before you decide to join.

[anarkista]

I will always remember that, Doc. And tonyp, i am still reading through the site. Pag-isipan ko ng mabuti. Thanks, Sirs!

[taz31]

very interesting thread! learned a lot from this one! Dr pepper, di ka lang pala master dun sa kabilang thread, pati rin pala sa business very informed ka din! :cool:

 

my question is: do all banks have UITF? My savings account is with Banco de oro, meron ba sila UITF? how much po ang initial investment? Thanks sir!

[Dr_PepPeR]

very interesting thread! learned a lot from this one! Dr pepper, di ka lang pala master dun sa kabilang thread, pati rin pala sa business very informed ka din! :cool:

 

my question is: do all banks have UITF? My savings account is with Banco de oro, meron ba sila UITF? how much po ang initial investment? Thanks sir!

 

Sorry sir, but I am not a master of anything, let alone that other thread you speak of.

 

Not all banks have UITFs. To have a UITF product, a bank must first be licensed by the Bangko Sentral to engage in the trust business. Not all banks authorized to do trust have UITFs. In general, the big commercial banks have UITF products, and even non-bank financial companies have UITFs too.

 

Banco de Oro is considered one of the bigger banks and has about five UITFs, four are Philippine Peso denominated and one is in US Dollars. These are the ones I know of, together with the minimum initial investment amount:

 

UITF BDO Peso Bond Fund

Php 100,000

 

UITF BDO Fixed Income Fund

Php 10,000

 

UITF Balanced Fund

Php 10,000

 

UITF BDO Dollar Bond Fund

US$ 2,000

 

Hope that helps

Edited January 24, 2007 by Dr_PepPeR

[anarkista]

Galing ng mga funds ngayon! Pataas ng pataas... sana tuloy tuloy ito. :-)

[Dr_PepPeR]

Galing ng mga funds ngayon! Pataas ng pataas... sana tuloy tuloy ito. :-)

 

In a low interest rate scenario, expect the peso bond funds to do very well. There is an inverse relation between interest rates and NAVPUs for these types of funds. The equity/balanced funds are also doing well due to the healthy performance of the PHISIX. Expect some corrections around Chinese New Year, it may be a good time to go in.

[taz31]

Thanks for the reply Dr. Pepper. Might go later at BDO to inquire more about UITF. Tnx again!

[tommy69]

I would like to suggest that iinstead of asking the branch manager with regards to the UITF's , better ask an investment banker or a financial manager....

No offence to the branch managers out there but I think most of them don't understand uitf's also....

 

or if they did, they haven't explained it clearly to the investors out there.

[golfer697]

Good day sir! The behavior of NAVPUs of Peso UITFs vs. the interest rate is an inverse one, so that if interest rates go down, NAVPUs will generally go up. Thus, in an environment of low interest rates, expect the Peso UITFs to go up and up.

 

For Dollar UITFs it will be harder to predict but if Peso interest rates continue to fall, so much so that US Dollar investments become more attractive, then as US Dollar interest rates go up, then Dollar NAVPUs will fall. This would work for local Dollar investments like Time Deposits but there are many other factors that affect Dollar UITF NAVPU behavior, and it would depend on where a UITF fund is invested in order to make an educated guess based on fundamentals. Traditionally, most Dollar UITFs are invested in Dollar ROPs so it would be best to look at the contents of the Dollar UITF and compare its behavior with the ROPs.

 

Short term ROPs will usually go down while long term ROPs will usually go up on a low interest rate scenario.

 

Hope that helps, just post again if you need more clarification.

 

 

 

Thanks a lot Dr. Pepper!! That info will come in handy!!!

[tonyp]

I would like to suggest that iinstead of asking the branch manager with regards to the UITF's , better ask an investment banker or a financial manager....

No offence to the branch managers out there but I think most of them don't understand uitf's also....

 

or if they did, they haven't explained it clearly to the investors out there.

 

Agree with you. My UITF is with a BPI branch but most often I consult with BPI Capital.

[dexterhaba]

sorry medyo OT pero kailangan ko kasi ng prof advise,,, pano ba ihandle ang hard earned dollar mo? kasi pag nilagay ko sa time deposit or UITF ung dollar parang mas maganda pa itago mlang tapos intayin mo tumaas,, saka ka magpapalit to peso,, kung 100k USD ang pera ko,,, tumaas lang ng piso ang dollar eh 100 k pesos na un di ba? Mageeleksyon pa man din,,, so imbes na maghintay ka sa interest ng time deposit,,, ganun nalang diskarte,,, tama po ba mga masters??? Please advise naman,, thanks

[anarkista]

In a low interest rate scenario, expect the peso bond funds to do very well. There is an inverse relation between interest rates and NAVPUs for these types of funds. The equity/balanced funds are also doing well due to the healthy performance of the PHISIX. Expect some corrections around Chinese New Year, it may be a good time to go in.

 

Doc Pepper,

I would like to ask for a clarification in your statement. When you said that there would be some corrections around Chinese New Year, does this imply that the current performance of equity/balanced funds or PHISIX is abnormal?

 

Thanks in advance!

[anarkista]

Pahabol: What's with the Chinese New Year that make corrections probable?

[Dr_PepPeR]

sorry medyo OT pero kailangan ko kasi ng prof advise,,, pano ba ihandle ang hard earned dollar mo? kasi pag nilagay ko sa time deposit or UITF ung dollar parang mas maganda pa itago mlang tapos intayin mo tumaas,, saka ka magpapalit to peso,, kung 100k USD ang pera ko,,, tumaas lang ng piso ang dollar eh 100 k pesos na un di ba? Mageeleksyon pa man din,,, so imbes na maghintay ka sa interest ng time deposit,,, ganun nalang diskarte,,, tama po ba mga masters??? Please advise naman,, thanks

 

Its your choice really. While waiting for the peso to weaken, just keeping your dollars under your mattress will produce zero interest and something may happen to it. And if you are expecting the peso to weaken with respect to the dollar, it will take awhile.

[Dr_PepPeR]

Doc Pepper,

I would like to ask for a clarification in your statement. When you said that there would be some corrections around Chinese New Year, does this imply that the current performance of equity/balanced funds or PHISIX is abnormal?

 

Thanks in advance!

 

No, I am not implying anything. When I say correction, it just means that a trend may flatten or reverse. I really don't know why but there is usually a correction sometime during Chinese New Year, caused by the behavior of money supply, which in turn affects NAVPUs.

[tonyp]

sorry medyo OT pero kailangan ko kasi ng prof advise,,, pano ba ihandle ang hard earned dollar mo? kasi pag nilagay ko sa time deposit or UITF ung dollar parang mas maganda pa itago mlang tapos intayin mo tumaas,, saka ka magpapalit to peso,, kung 100k USD ang pera ko,,, tumaas lang ng piso ang dollar eh 100 k pesos na un di ba? Mageeleksyon pa man din,,, so imbes na maghintay ka sa interest ng time deposit,,, ganun nalang diskarte,,, tama po ba mga masters??? Please advise naman,, thanks

 

At an exchange rate of say 48.50 to a dollar, the P1 aprreciation assumes that you will exchange it when it reaches 49.50. The peso increment translate to a yield of 2% (1/48.50). Annualize this with a holding period of say 6 months then the annual yield is 4%.

 

As an option, convert half at 48.50 and put the money in a portfolio of investments. Say a third coes to UITF, a third in stocks and the rest in mutual funds and high yield deposits in small banks which are covered by PDIC. You can place these in your name and other relatives.

[anarkista]

No, I am not implying anything. When I say correction, it just means that a trend may flatten or reverse. I really don't know why but there is usually a correction sometime during Chinese New Year, caused by the behavior of money supply, which in turn affects NAVPUs.

Thanks, Doc Pepper. I think I have to check my macroecon notes... nakalimutan ko na ang effect ng money supply sa ekonomiya e. hehehe. Salamat ulit! :cool: :mtc: :thumbsupsmiley:

[taz31]

question lang po: if for example I invest 10,000 initially sa BDO balanced fund, di ba i-didivide yun for the NAVPU for the day and the result is yung # of shares ko. i know that it has a holding period of 30 days. may question is, pwede ko bang dagdagan yung initial investment ko every month. i plan to deposit let's say 3000 every month, pwede ba yun? pano yung # of shares ko, tataas din ba? tnx in advance!

[Dr_PepPeR]

question lang po: if for example I invest 10,000 initially sa BDO balanced fund, di ba i-didivide yun for the NAVPU for the day and the result is yung # of shares ko. i know that it has a holding period of 30 days. may question is, pwede ko bang dagdagan yung initial investment ko every month. i plan to deposit let's say 3000 every month, pwede ba yun? pano yung # of shares ko, tataas din ba? tnx in advance!

 

Most UITFs allow you to add to your initial subsciption in amounts less than the initial opening amount. Please check again the terms. I'm quite sure you can subscribe for new units every month. Every time you add, you will be given the corresponding number of units depending on the NAVPU for the day. You will be given a Certificate of Participation (COP)for each subscription showing you the number of units you have subscribed to so in that sense, you will have more units although it will be on different COPs.

[taz31]

^thanks for the reply. 1 more question. anong oras po ba ni-rerelease yung NAVPU for the day. kasi kapag i-checheck ko sa website ng BDO ng umaga, yung sa previous day pa yung nakalagay dun. Pano po kung mag-invest ako ng umaga, mga 10 am. Ang gagamitin bang NAVPU is from the previous day? Tnx po!

[Dr_PepPeR]

^thanks for the reply. 1 more question. anong oras po ba ni-rerelease yung NAVPU for the day. kasi kapag i-checheck ko sa website ng BDO ng umaga, yung sa previous day pa yung nakalagay dun. Pano po kung mag-invest ako ng umaga, mga 10 am. Ang gagamitin bang NAVPU is from the previous day? Tnx po!

 

NAVPUs are computed in the afternoon, after all the transactions of the UITF are done. You will notice that when you subscribe there is a cut-off time, usually lunchtime. The number of units that you will get will depend on that day's NAVPU so you will know that only in the afternoon. Same thing when you redeem, the NAVPU that will be used will be for the day you submitted your Notice of Redemption and that is why you get your proceeds later in the day or on the next day.

[sunking]

question lang po: if for example I invest 10,000 initially sa BDO balanced fund, di ba i-didivide yun for the NAVPU for the day and the result is yung # of shares ko. i know that it has a holding period of 30 days. may question is, pwede ko bang dagdagan yung initial investment ko every month. i plan to deposit let's say 3000 every month, pwede ba yun? pano yung # of shares ko, tataas din ba? tnx in advance!

 

I have 20K in a BDO Balanced Fund since April 06. If my computations are correct, since the economy has been doing well, I've made 5k more. Not bad. When I opened it, I asked about topping up in this. The lady mentioned you can't. I think it works basically works like a opening an order in any market (forex/stocks): each order is different, you will get different certificates, etc. You can't modify orders in terms of adding to its value by adding capital.

 

My question for the masters:

 

I'm trying to track when I should pull out my NAVPU. Last time I tracked the stock marker, we were still uptrending, so I'm wondering what I should be watching out for in terms of fundamentals before the trend reverses. How will the May elections affect this? I think the uncertainty of Philippine elections and politics might flatten and reverse the markets. Should I pull out by April? Thanks.

[Dr_PepPeR]

I have 20K in a BDO Balanced Fund since April 06. If my computations are correct, since the economy has been doing well, I've made 5k more. Not bad. When I opened it, I asked about topping up in this. The lady mentioned you can't. I think it works basically works like a opening an order in any market (forex/stocks): each order is different, you will get different certificates, etc. You can't modify orders in terms of adding to its value by adding capital.

 

My question for the masters:

 

I'm trying to track when I should pull out my NAVPU. Last time I tracked the stock marker, we were still uptrending, so I'm wondering what I should be watching out for in terms of fundamentals before the trend reverses. How will the May elections affect this? I think the uncertainty of Philippine elections and politics might flatten and reverse the markets. Should I pull out by April? Thanks.

 

You are quite correct in that each order is different in the sense that you will be given another COP for that since the NAVPU will be different so it is considered a separate transaction from your original one. Technically you haven't made a centavo. You only realize your gain or loss when you actually redeem your placement. If you redeem now, then you would have made your 5K. What some people do is they redeem when they have made some profit, keep the income and put back the principal at the current NAVPU. This allows them to actually realize the income.

 

In terms of pulling out of a UITF, for fixed income funds, you might want to pull out and realize your gain when there are indications that the interest rates are going up, which may be caused by several factors such as a tightening of the money supply. When interest rates go up, the fixed income instrument NAVPUs will start to go down. When they hit bottom, it would be a good time to start getting in again, since you will be able to get the units at a cheap price. For balanced/equity funds, you might want to go out when the fundamentals of the blue chips start to go down. That's just my take on it. I'd like to know what the others say about this.

Edited February 1, 2007 by Dr_PepPeR

[sunking]

Thank you for the corrections. Of course... like any order, it's not profit till you exit the trade/sell the position.

 

Just wondering, BDO's performance reports' charts show a big downtrend in their balanced fund performance around March/April of last year. Does anybody have any data about what happened at that time that caused that downtrend?

[Dr_PepPeR]

Thank you for the corrections. Of course... like any order, it's not profit till you exit the trade/sell the position.

 

Just wondering, BDO's performance reports' charts show a big downtrend in their balanced fund performance around March/April of last year. Does anybody have any data about what happened at that time that caused that downtrend?

 

Not corrections sir, just trying to put it in a proper perspective. The big drop happened around May or June last year when interest rates started to go up. This caused the NAVPUs to go steeply down, since BDO was heavily invested in long term FXTNs. Apparently, the UITF subscribers panicked and pulled most of their funds out, wiping out the liquidity of the UITF and forcing BDO to liquidate even their long term FXTNs at a loss, causing a further drop in NAVPUs. A double whammy so to speak. Since then, all the fund managers have chosen to be more cautious in terms of volatility of the NAVPU over time.