Unit Investment Trust Funds (uitf)

[sunking]

Consolidation. Time to take a breather. Hard to jump in right now, since the dips aren't that solid. Still possible, but I ended up holding on to my cash. Still keep my BDO balanced in. Maybe with a relatively strong support dip, I'll realize my profit from April last year, top up and go back in.

[anarkista]

Prices now are the same as of 5 weeks ago. Makes me a bit nervous. But honestly, I still am seeing good signs in the big picture. I mean, the economy is relatively well... I want to buy some more equity shares. You think this is advisable? I mean, I don't think I would be needing this cash for the next few months anyway. I can probably let it stay till end of the year. Or even later.

[Dr_PepPeR]

Correction and consolidation phase. Inevitable really. Again, if you have the stomach for it, snap up the blue chips while they are low. Jez mah 'pinion folks.

[scooby91]

Correction and consolidation phase. Inevitable really. Again, if you have the stomach for it, snap up the blue chips while they are low. Jez mah 'pinion folks.

 

Dr._P, thanks for sound advice... pls permit me to inquire further... if fundamentals are still on the "+" side, is okay to buy into some specualtive issues.. ie.e mining stocks? any particular industry that performs better during election season? Para hindi OT, better ba to switch from bond/balanced funds to equity funds this time of year?

[Dr_PepPeR]

Dr._P, thanks for sound advice... pls permit me to inquire further... if fundamentals are still on the "+" side, is okay to buy into some specualtive issues.. ie.e mining stocks? any particular industry that performs better during election season? Para hindi OT, better ba to switch from bond/balanced funds to equity funds this time of year?

 

In general, since fundamentals of most corporates are as you said on the plus side, it would be better to get stocks of companies that show good fundamentals but may be undervalued at the moment. Mining stocks are not necessarily speculative since the big mining companies are showing healthy net incomes so far. I don't recall any industry that thrives during election season since this is a relative short period anyway. You can still switch to equity/balanced funds at this point since the expectation is that companies and the economy will do well till the end of the year.

[golfer697]

The equity funds are sooo scary nowadays!!! Very wild swings!!! My uitf placed 30 days ago lost a lot and just broke even today...I hope! The fundamentals are still good though, so they say. But with a 33% chance of a recession in the USA, one of our major trading partners, won't equity funds be too risky? A recession cycle will usually last for 4 years! Scary!! Is it worth the risk or should we pull out???

[tonyp]

The equity funds are sooo scary nowadays!!! Very wild swings!!! My uitf placed 30 days ago lost a lot and just broke even today...I hope! The fundamentals are still good though, so they say. But with a 33% chance of a recession in the USA, one of our major trading partners, won't equity funds be too risky? A recession cycle will usually last for 4 years! Scary!! Is it worth the risk or should we pull out???

 

It depends on where you placed the funds. Mine had a NAV of 122.53 on Feb. 12 and as of Mar. 12 is now 123.17 or an increment of 0.64. If you annualize this, the rate is 6.27%. Still better than time deposit.

 

With stocks, stick to blue chips. Last week was a good time to get in.

[tacamonchi]

tonyp- My PBCom uitf annualized is 4.82% as of yesterday. Can you tell me what bank gives you 6.27%- is it BPI Premium?

 

staying away from the equity markets this whole year- at this point, the risks of loss outweighs the possibility of gains. but if you had money for long term investmen and you still have faith in our stock markett, of course, buy blue chips.

[Guest lene]

Correction and consolidation phase. Inevitable really. Again, if you have the stomach for it, snap up the blue chips while they are low. Jez mah 'pinion folks.

 

right again, dr. pepper. its really inevitable for corrections , the market has been moving way too fast . and i think people should " snap up " your opinions since they are better than any blue chip stock in the market :cool:

Edited March 13, 2007 by lene

[tonyp]

tonyp- My PBCom uitf annualized is 4.82% as of yesterday. Can you tell me what bank gives you 6.27%- is it BPI Premium?

 

staying away from the equity markets this whole year- at this point, the risks of loss outweighs the possibility of gains. but if you had money for long term investmen and you still have faith in our stock markett, of course, buy blue chips.

 

BPI Premium. Regards.

[qrv777]

fixed income changed relative low yesterday..

 

Pa down trend ata ngayon.

[Dr_PepPeR]

fixed income changed relative low yesterday..

 

Pa down trend ata ngayon.

 

Yesterday the market went crazy, Wall Street and Nikkei among others going down, affecting even the fixed income UITFs. The perils of globalization I think.

[tacamonchi]

My UITF officer called me yesterday to inform me that my phili. bond based UITF had gone down to 4.47% (and it was 4.82%) two days ago. Will stick it out and not contribute to panic selling but at the end of this month- may bail out.

[golfer697]

It depends on where you placed the funds. Mine had a NAV of 122.53 on Feb. 12 and as of Mar. 12 is now 123.17 or an increment of 0.64. If you annualize this, the rate is 6.27%. Still better than time deposit.

 

With stocks, stick to blue chips. Last week was a good time to get in.

 

My fixed income dollars & pesos still doing around 10% but my equity is negative 27%!!! That was as of yesterday!!! Today's navpus still not available! Bloomberg said philippine bonds slumped, worlds biggest mover!! My ROPs still doing okay. Hope they were not affected! I'd get out of uitfs if there were better alternatives cause I am seeking a return of at least 15% per annum. Anything less will be eaten up by inflation leaving you almost nothing.

[qrv777]

i'll see what happen next week.. i might bail out my peso investment... the dollar's are holding...

[tacamonchi]

My uitf officer texted me this pm that my navs went down further than yesteday's drop. baka 4% na lang ang annualized returns. Just waiting for the UITFs to stabilize (wishful thinking ba?) before i pull out and deposit in the rural banks that are now giving me 20% per year, net of tax. Mali yata ang pasok ko sa UITF- wrong timing....

[Dr_PepPeR]

UITFs are intended to have long term investment horizons, most will have at least one year. Annualizing the ROI at this point, especially if you are doing this YTD is not indicative. In fact, annualizing the ROI is not done by any sane bank because it can be quite misleading. If you are the type who shifts investments because you think the market will move somewhere on a daily or even on a weekly basis, don't go into UITFs. You are simply second-guessing the investment manager. It might be better to invest it yourself directly, at least you get everything net instead of paying part of your investment income as trust fees.

[Guest lene]

UITFs are intended to have long term investment horizons, most will have at least one year. Annualizing the ROI at this point, especially if you are doing this YTD is not indicative. In fact, annualizing the ROI is not done by any sane bank because it can be quite misleading. If you are the type who shifts investments because you think the market will move somewhere on a daily or even on a weekly basis, don't go into UITFs. You are simply second-guessing the investment manager. It might be better to invest it yourself directly, at least you get everything net instead of paying part of your investment income as trust fees.

 

I agree with Dr. Pepper. Last year when the bond prices fell , a lot of people panicked because when they bought the UITFs earlier , they were enticed by the seemingly high ROI's which were annualized. Unfortunately, not all banks were able to explain the product properly to clients ( in most cases, even the branch officers didn't understand the product very well and sold it on the basis of "returns" ). Nowadays, historical returns given are on an absolute basis.

 

If you can help yourself,stop looking at the price daily.If you bought the UITF today,look at it again in 6 mos or in a year's time. Fluctuations are normal considering the marked to market valuation of UITFs but over a long period, you tend to ride out these fluctuations.

[sunking]

I agree with Dr. Pepper. Last year when the bond prices fell , a lot of people panicked because when they bought the UITFs earlier , they were enticed by the seemingly high ROI's which were annualized. Unfortunately, not all banks were able to explain the product properly to clients ( in most cases, even the branch officers didn't understand the product very well and sold it on the basis of "returns" ). Nowadays, historical returns given are on an absolute basis.

 

If you can help yourself,stop looking at the price daily.If you bought the UITF today,look at it again in 6 mos or in a year's time. Fluctuations are normal considering the marked to market valuation of UITFs but over a long period, you tend to ride out these fluctuations.

 

Hear hear!

 

Real-life example:

 

BDO balanced fund from last year April - 1622.xxxx NAVPU

Right now - 22xx.xxxx (and that's with the downturn recently)

 

Only reason I'd actualize profit: if I had more to put in (but I'm saving up for a trust/life product)

 

Only wish: that I'd bought earlier than April heheheheh! I check the NAVPU's usually quarterly, around the time they post their reports.

[tonyp]

When I mentioned earlier about annualizing it was intended to be used as a tool in keeping track of your investment.

 

What if you got in Day 1 when NAV’s are, say at 110.25, and you went back on Day 90 (end of the holding period) you realized that the NAV is only 111.00.

 

What could have happened? A scenario like this may have happened: at Day 60 it may have peaked at 112.00 and eventually slide to 111.00 at Day 90 due to factors beyond the control of the investor. This happened in 2006.

 

In my own experience last year, I was able to get out when it started to slide and did not wait for the end of the holding period. I was annualizing my investment on a daily basis by keeping track of the NAV rates. These rates are accessible via the internet. At a certain point in time last year I was getting an annualized rate of 22% which was definitely an extraordinarily high return which will not last.

 

My suggestion. Have a strategy when you go into a certain investment where the return for a fixed period is uncertain. Establish the penalty rate to get out before the end of the holding period.

[golfer697]

I agree with Dr. Pepper. Last year when the bond prices fell , a lot of people panicked because when they bought the UITFs earlier , they were enticed by the seemingly high ROI's which were annualized. Unfortunately, not all banks were able to explain the product properly to clients ( in most cases, even the branch officers didn't understand the product very well and sold it on the basis of "returns" ). Nowadays, historical returns given are on an absolute basis.

 

If you can help yourself,stop looking at the price daily.If you bought the UITF today,look at it again in 6 mos or in a year's time. Fluctuations are normal considering the marked to market valuation of UITFs but over a long period, you tend to ride out these fluctuations.

 

 

That is a good point! Saves you from stress!! Hehehe! Wala na akong napapanood nowadays except Bloomberg!! However, on the other hand, if you do monitor your UITFs regularly, you can react by pulling out & going back in at the right time!! Case in Point - When it slumped last year, I pulled out & went back in after 3 months! Checking my charts, I am now earning at 10% rather than if I stayed in, the earnings would have been only 7%!! That's cause you go in at lower navpus. I recovered my losses the time I went out by going into bonds for 90 days. Good thing I was able to go out early on before navpus went down lower.

[Dr_PepPeR]

That is a good point! Saves you from stress!! Hehehe! Wala na akong napapanood nowadays except Bloomberg!! However, on the other hand, if you do monitor your UITFs regularly, you can react by pulling out & going back in at the right time!! Case in Point - When it slumped last year, I pulled out & went back in after 3 months! Checking my charts, I am now earning at 10% rather than if I stayed in, the earnings would have been only 7%!! That's cause you go in at lower navpus. I recovered my losses the time I went out by going into bonds for 90 days. Good thing I was able to go out early on before navpus went down lower.

 

Of course, if you really want to play it like the stock market, it is really up to you. However, you will really be on your own since there will be a lack of fundamental and technical tools for you to base your orders on. You also have to take into account the pretermination periods, some are as short as 30 days while others are 90 days. But like equities, the rule is simple, buy low sell high. Don't wait for the topping off or bottoming off, by that time it may be too late. Good luck!

[koolkalangxyz]

I'm not sure if this is a valid question but I would just like to know what happens to the dividends where the funds are invested in? Does it go to the bank? or will these be reflected on the NAVpu as well?

[Dr_PepPeR]

I'm not sure if this is a valid question but I would just like to know what happens to the dividends where the funds are invested in? Does it go to the bank? or will these be reflected on the NAVpu as well?

 

If you mean the interest/trading gain/loss of the assets held in the UITF, these are of course reflected in the NAVPUs (one way to look at it is that it is distributed among the subscribers). NAV = Net Asset Value = Assets less Expenses. This is computed daily so the market price of the asset is the basis for the asset value. If there is actual interest income realized, then it increases the Assets, but the prime determinant is the price of the asset at the end of the day. The expenses include all allowable expenses such as broker's commission (for equities), taxes, and trust fees. Only the trust fees go to the bank.

[weekdaywarrior69]

Hi Sir Doc Pepper,

 

Is it a good time to get in right now considering there seems to be a downtrend on NAVPU for the past days?

 

By the way, I sent you a PM hope you got to read it.