Unit Investment Trust Funds (uitf)

[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.

[scooby91]

To Dr_P and the other Masters in this thread...

 

As a newbie investor, wat instruments do u recommend a novice investor go into, given current state of Pinas market.

From wat i understand, the stock market still has some momentum (some steam left). Can we expect it to be bullish for at elast the next 6 mos.? I also looked at most of the local equity mutual funds, and almost all are in the all time highs..

 

thanks in advance

[Dr_PepPeR]

To Dr_P and the other Masters in this thread...

 

As a newbie investor, wat instruments do u recommend a novice investor go into, given current state of Pinas market.

From wat i understand, the stock market still has some momentum (some steam left). Can we expect it to be bullish for at elast the next 6 mos.? I also looked at most of the local equity mutual funds, and almost all are in the all time highs..

 

thanks in advance

 

Of course, I would recommend UITFs, either fixed income or balanced funds. From current indications, I expect the NAVPUs to keep going up at least until the local elections. The usual caveat emptor blah blah blah. :hypocritesmiley:

Edited February 5, 2007 by Dr_PepPeR

[golfer697]

Having a hard time posting here. The page is not loading properly. Well anyway, how come the peso uitfs have been trending down, while the dollar uitfs suffered a dramatic downturn?? Lost 2% the other day! ROPs have corrected too! Any news???? Thanks1

[Dr_PepPeR]

Having a hard time posting here. The page is not loading properly. Well anyway, how come the peso uitfs have been trending down, while the dollar uitfs suffered a dramatic downturn?? Lost 2% the other day! ROPs have corrected too! Any news???? Thanks1

 

When you say trending down it means that the NAVPU rates should be going down over some time. I haven't seen this yet. Which particular peso UITFs are you referring to? The US dollar UITFs are influenced to a large extent by US Treasuries. If the US Treasuries almost match ROP rates, then this would bring down the demand for US$ ROPs and subsequently bring down the prices, causing the NAVPU of US$ UITFs to drop. You haven't lost the 2% unless you redeem it.

[tonyp]

Having a hard time posting here. The page is not loading properly. Well anyway, how come the peso uitfs have been trending down, while the dollar uitfs suffered a dramatic downturn?? Lost 2% the other day! ROPs have corrected too! Any news???? Thanks1

 

Agree with Dr. Pepper. The 2% loss may be due to the early termination. Always take note of the maturity period and the penalty rate to get out before its holding period.

 

The uptrend of the NAV's are not consistently going up. There are declines on a temporary basis but eventually goes up. Still okay so far.