Unit Investment Trust Funds (uitf)

[Guest lene]

Didn't know that some banks base their pretermination penalty on the proceeds!!! That would be unfair!!! And yes you are right, there's a great possibility that win or lose there's still a tendency to end up losing. Mine charges penalties on the income so one can actually play with the placement.

 

Really? I didn't know that there were some banks that would charge penalties on the "income" alone, considering the valuation is marked to market and normally, early pretermination prices are based on a certain percentage below the regular price. Would you care to share the name of your bank that does this?

[wek1012]

hi just wanna ask if only banks offer uitf? ano ung inooffer s sunlife, philaxa? are those uitf's also? if they are not, which is better?

[Dr_PepPeR]

hi just wanna ask if only banks offer uitf? ano ung inooffer s sunlife, philaxa? are those uitf's also? if they are not, which is better?

 

Not really, only institutions who have a trust license can offer UITF products. ATR Kim Eng, Philequity and some other investment houses offer UITF products, Sunlife and Philaxa offer insurance investment products such as Sunlife's Honeypot and Philaxa's...I forgot. But these are not UITF nor mutual funds but still use the pooled fund concept for investments. Of course, I'm biased towards UITFs since banks normally charge the least management fees and they are regulated by the Bangko Sentral which is much stricter (and a lot more assholic) than the Insurance Commision in terms of audit. I really shouldn't be posting at 3:00am in the morning.

[golfer697]

Really? I didn't know that there were some banks that would charge penalties on the "income" alone, considering the valuation is marked to market and normally, early pretermination prices are based on a certain percentage below the regular price. Would you care to share the name of your bank that does this?

 

 

MetroBank & BDO charges penalties based on the income. Which banks charge based on the placement amount?? Thanks.

[golfer697]

Not really, only institutions who have a trust license can offer UITF products. ATR Kim Eng, Philequity and some other investment houses offer UITF products, Sunlife and Philaxa offer insurance investment products such as Sunlife's Honeypot and Philaxa's...I forgot. But these are not UITF nor mutual funds but still use the pooled fund concept for investments. Of course, I'm biased towards UITFs since banks normally charge the least management fees and they are regulated by the Bangko Sentral which is much stricter (and a lot more assholic) than the Insurance Commision in terms of audit. I really shouldn't be posting at 3:00am in the morning.

 

 

Hehe sobrang masipag magpost! Or you came from somewhere??

Have been offered AXA a lot of times but the returns aren't that good! SunLife recommends that you lock in for 2 to 5 years which is too long for me!

[Guest lene]

MetroBank & BDO charges penalties based on the income. Which banks charge based on the placement amount?? Thanks.

 

Perhaps you can check with your bank again since I don't think it's possible to charge penalties on the "income" alone . The concept of UITFs is you buy a number of units at a certain price. After a certain period, you redeem it at the prevailing market price or NAVPU . Whatever is the difference of both prices is your "gain" or "loss". If you redeem it before the end of the holding period, the price they will normally use will be a bit lower than the NAVPU for the day. Using this lower price, you can see it you gained or lost in the transaction ( based on the original NAVPU you bought the UITF at).

 

Perhaps in your case when you redeemed early, the price set is still higher than the price you bought it at so you would presume the penalty is just on the " income" alone.

 

Please correct me, Dr. Pepper, if I may be wrong in my understanding....

[gere]

Just my take.

All of these came about when the "new" Phil. Accounting System (PAF) came into effect. The purpose is to

prevent companies (mostly banks) to window dress their Net Asset Value (NAV). Whereas before when banks

invest, the value at the time of acquisition is declared even if there has been a change in the market value of

the investment. Today, any changes means banks will have to adjust accordingly (mark to merket is what they

call it) and therefore NAVs fall down. But it does not mean your investment goes down the drain. It simply means

holding period becomes longer. It would be wise to deal with local banks with a Rating of 1. Only 2 or 3 banks are rated

such. As for MNCs, 1 bank made a debacle on their Common Trust Fund (CTF) which was a boon to some investors.

But given the abnormal situation in the banking industry, with transfer pool rates and T-bill rates at an all time low,

where will you invest your money? The stock market is not good either since the price per earning ratios are not as

reliable as it seems. There are even speculations SMC is overpriced 10 times over. What is disheartening is that once

beer cases go out the warehouses, it is declared sold when it fact it is still inventory. Only in the Philippines. Oh well.

[Dr_PepPeR]

Hehe sobrang masipag magpost! Or you came from somewhere??

Have been offered AXA a lot of times but the returns aren't that good! SunLife recommends that you lock in for 2 to 5 years which is too long for me!

 

Sometimes going long will be the only way to get higher returns. For example, if your investment is at least 5 years then it is tax exempt under the CTRP. I am sure there will be something out there for your particular investment objectives, its just a matter of sifting through all the hype and products.

[Dr_PepPeR]

Perhaps you can check with your bank again since I don't think it's possible to charge penalties on the "income" alone . The concept of UITFs is you buy a number of units at a certain price. After a certain period, you redeem it at the prevailing market price or NAVPU . Whatever is the difference of both prices is your "gain" or "loss". If you redeem it before the end of the holding period, the price they will normally use will be a bit lower than the NAVPU for the day. Using this lower price, you can see it you gained or lost in the transaction ( based on the original NAVPU you bought the UITF at).

 

Perhaps in your case when you redeemed early, the price set is still higher than the price you bought it at so you would presume the penalty is just on the " income" alone.

 

Please correct me, Dr. Pepper, if I may be wrong in my understanding....

 

I think you've hit the nail right on the head, ma'am. Under the UITF concept, it is theoretically possible to lose your principal. So if only the income is to be affected by pretermination, it may be taken to mean that the bank indirectly guarantees the principal, which of course is prohibitied under BSP trust regulations and BSP Circular 447 which provides the UITF regulations.

[Dr_PepPeR]

Just my take.

All of these came about when the "new" Phil. Accounting System (PAF) came into effect. The purpose is to

prevent companies (mostly banks) to window dress their Net Asset Value (NAV). Whereas before when banks

invest, the value at the time of acquisition is declared even if there has been a change in the market value of

the investment. Today, any changes means banks will have to adjust accordingly (mark to merket is what they

call it) and therefore NAVs fall down. But it does not mean your investment goes down the drain. It simply means

holding period becomes longer. It would be wise to deal with local banks with a Rating of 1. Only 2 or 3 banks are rated

such. As for MNCs, 1 bank made a debacle on their Common Trust Fund (CTF) which was a boon to some investors.

But given the abnormal situation in the banking industry, with transfer pool rates and T-bill rates at an all time low,

where will you invest your money? The stock market is not good either since the price per earning ratios are not as

reliable as it seems. There are even speculations SMC is overpriced 10 times over. What is disheartening is that once

beer cases go out the warehouses, it is declared sold when it fact it is still inventory. Only in the Philippines. Oh well.

 

Just to clarify this a bit. PAS 19 and 39 deals with the proper way to book investments, employee benefit liability and embedded contracts among others. Since it is an accounting standard, it deals mainly with how a company presents its books, which reflects the financial condition of the COMPANY or the BANK, and not the UITF itself. The way the NAV of a UITF is generated is governed mainly by BSP Circular No. 447, which mandates marking to market valuation of the assets of the UITF. Thus, any asset that cannot be valued using the mark to market method is not eligible as an investment outlet for the UITF. The UITF Net Asset Value is different from the Net Asset Value of the Banki's assets, and the latter is not quite relevant to UITF NAV since these are booked separately as contingent assets in the Bank's financial statements. The Bank's NAV would mostly be relevant in determining the fundamentals of the Bank for investment purposes in the Bank's stock.

[allworkallplay]

morning all, glad to see a few people here spreading the word out to others about UITF's.

 

To interested/potential investors passing by, I certainly hope you all consider UITF's as an alternative to your demand deposit and term deposit accounts. There are many offerings that cater to your risk profile, investment amount and horizon. If the reason you are holding on to a time deposit is protecting your money, do note that even conservative fund offerings offer better returns for minimal risk. Visit a bank near you and try it out

[golfer697]

Perhaps you can check with your bank again since I don't think it's possible to charge penalties on the "income" alone . The concept of UITFs is you buy a number of units at a certain price. After a certain period, you redeem it at the prevailing market price or NAVPU . Whatever is the difference of both prices is your "gain" or "loss". If you redeem it before the end of the holding period, the price they will normally use will be a bit lower than the NAVPU for the day. Using this lower price, you can see it you gained or lost in the transaction ( based on the original NAVPU you bought the UITF at).

 

Perhaps in your case when you redeemed early, the price set is still higher than the price you bought it at so you would presume the penalty is just on the " income" alone.

 

Please correct me, Dr. Pepper, if I may be wrong in my understanding....

 

 

I am fully aware of the NAVPUs at cost & when you sell. I've asked them countless times & even read their contract! Better still, I experienced this before when the UITFs bombed in March! I preterminated and all they did was to give me back my placement based on the day's prevailing NAVPU since I preterminated at a loss!! No penalties were charged since I lost!! Their penalty fee is 50% of income!! It would be horrendous to think that they will charge me 50% of my placement!!! I left the money in RTBs then went back in May 2006. I would not have preterminated if they will penalize me on my placement amount! And this is not saying that they were guaranteeing my placements. Which banks again are you dealing with dearie, so I can avoid them???

[Dr_PepPeR]

I am fully aware of the NAVPUs at cost & when you sell. I've asked them countless times & even read their contract! Better still, I experienced this before when the UITFs bombed in March! I preterminated and all they did was to give me back my placement based on the day's prevailing NAVPU since I preterminated at a loss!! No penalties were charged since I lost!! Their penalty fee is 50% of income!! It would be horrendous to think that they will charge me 50% of my placement!!! I left the money in RTBs then went back in May 2006. I would not have preterminated if they will penalize me on my placement amount! And this is not saying that they were guaranteeing my placements. Which banks again are you dealing with dearie, so I can avoid them???

 

So they gave you back the initial amount you placed with them? If that is true, and if the NAVPU when you preterminated was lower than when you came in, in effect they guaranteed your principal. As far as I know, that is a no-no for trust and UITFs in particular. I forget, which bank is this sir?

[Guest lene]

So they gave you back the initial amount you placed with them? If that is true, and if the NAVPU when you preterminated was lower than when you came in, in effect they guaranteed your principal. As far as I know, that is a no-no for trust and UITFs in particular. I forget, which bank is this sir?

 

Dr. Pepper, I believe golfer697 mentioned Metrobank and BDO.

 

 

golfer697, I deal with several banks for their various UITFs including the banks you mentioned but I don't think it's possible to " guarantee" protection of principal in case market is really against the UITFs. If your bank returned your principal last year, even if the NAVPU was lower than the price you bought it at, Dr. Pepper is right in his observation that they guaranteed your principal, which is a no-no for UITFs. That is why I suggested that perhaps when you preterminated last year, the early redemption price was still higher than your original NAVPU, which is why you might have presumed that the penalty is on the income alone. :flowers:

 

I do hope you check with your bank again, sir, because the contact person you are talking to might have sold it incorrectly and that is a cause of concern. The only way UITFs can flourish in this country is if the banks concerned train their people well in selling the product correctly so that clients who buy the UITFs will understand the inherent risks involved but at the same time, will understand that they also have more to gain in the long run.

[wek1012]

how do i know which bank and which type of uitf should i invest? i do have an udnerstnading that which tyype of uitf is dependent on my risk appetite, is this right?