Unit Investment Trust Funds (uitf)

[Dr_PepPeR]

After my problems with metrobank especially with regards to the transparency, I have decided to move all of uitf's to bdo. some banks like bdo and hsbc/ing have weekly updates and economic outlook that would serve as an indicator of how the trends affecting the direction of where our investments are going. At the very least, i could have trim some of the opportunity loss that i incurred when i pulled out from my metrobank starter fund to preseve some of my gains.

I've talked to the trust departments of bdo and metrobank and the way they deal with investors is very different. metrobank believes that the branch tellers should be the ones to educate and to inform their clients about their uitfs while bdo gives them the option of either being informed thru the branch or email.

I had problems with tellers regarding simple transactions like check deposits so I will have problems with the credibility of tellers explaining such concepts like ROP's, CP's, FXTN's, SSA's, etc.

 

Your experiences simply reflect two different approaches by banks in dealing with their UITF clients.

 

For Metrobank, UITFs are considered branch products, which means the branch is responsible for informing their clients and booking the client's placements with the branch. The Trust therefore does not deal with the individual clients, it does not even know who they are as they are clients of the branches. Any notices, information, payments etc are handed down by the trust department directly to the branches for proper disposition. If you were not satisfied with the branch personnel, that should be their concern, not the Trust Department. If you feel that you were not helped by the Trust Department, it is simply because they do not know you, since you are a branch client.

 

For BDO, they are making up for the shortcomings of the way their branches marketed their UITFs. If you were accommodated by their Trust Department, think of it more as damage control on their part.

 

Of course tellers cannot discuss UITFs with you. They are not capable, nor are they licensed to market UITFs. Yes, you need to be certified to do this and only marketing personnel at the branch who have taken and passed a certification exam are authorized to discuss UITFs. I suggest you talk to the branch manager and he will refer you to the proper person or even do it himself.

[FF]

hi doc ! have a small nest egg in CTF in equi pcib . problem is ... they're moving from ctf to uitfs by october ( cb ruling yata or sec i dunno which) .

 

how does this affect me ? acc to my brnach mgr ... mas maganda raw rates as ytd ng uitf is around 12% p.a. versus the 7 % guaranteed im getting now ...

 

any advice doc ?

[Dr_PepPeR]

hi doc ! have a small nest egg in CTF in equi pcib . problem is ... they're moving from ctf to uitfs by october ( cb ruling yata or sec i dunno which) .

 

how does this affect me ? acc to my brnach mgr ... mas maganda raw rates as ytd ng uitf is around 12% p.a. versus the 7 % guaranteed im getting now ...

 

any advice doc ?

 

Whether you like it or not, CTFs will be wound down by October 26, 2006. If you do nothing, your CTF placement will be moved to a UITF at best or at the worst, they will simply put it in savings. The BM said 12% but that is year to date, not per annum. That means from start of the year to current date, the rate is 12%, if you annualize it (per annum) that is pretty high. You have to remember that is only the historical rate and there is no guarantee that it will perform just as well in the future. But considering your alternatives which is special savings and time deposit, then I suggest you go to a fixed income medium term UITF. At least you will have steady but not spectacular rates of return much much better than special savings or timed deposit. By the way, the 7% is not guaranteed for a CTF, a CTF's return is much more manageable since it is on an accrual basis and not marked-to-market.

[FF]

Whether you like it or not, CTFs will be wound down by October 26, 2006. If you do nothing, your CTF placement will be moved to a UITF at best or at the worst, they will simply put it in savings. The BM said 12% but that is year to date, not per annum. That means from start of the year to current date, the rate is 12%, if you annualize it (per annum) that is pretty high. You have to remember that is only the historical rate and there is no guarantee that it will perform just as well in the future. But considering your alternatives which is special savings and time deposit, then I suggest you go to a fixed income medium term UITF. At least you will have steady but not spectacular rates of return much much better than special savings or timed deposit. By the way, the 7% is not guaranteed for a CTF, a CTF's return is much more manageable since it is on an accrual basis and not marked-to-market.

 

salamat doc pepper ! you da man ! :cool:

[Dr_PepPeR]

salamat doc pepper ! you da man ! :cool:

 

No problem sir. Just ask if I can help you with anything else about trusts.

[guard]

HI Dr Pepper. Any recos on what UITF's can I place my hard earned money? I'm more into the conservative placements. Thanks!

[Dr_PepPeR]

HI Dr Pepper. Any recos on what UITF's can I place my hard earned money? I'm more into the conservative placements. Thanks!

 

If you are the more conservative type, look for money market, fixed income or bond UITF products. These have no stocks or equities and the fixed income instruments they invest in tend to have a mixture of short and long term government securities. Depending on how conservative you are, you can choose among them, depending on their asset allocation, by looking at what are the outstanding investments in their fund. The trust departments of banks will normally have the latest asset allocation on a daily basis. You can ask the branch you are a client of and let them request from the head offce Trust to provide you with a hard copy.

[teban]

hi doc pepper you seem to know the UITF like the back of your hand.

 

if you were to choose which bank does give the best service, and rates for the UITF? i am also planning to get one.

[bRIX]

^ I suggest BDO...

[Dr_PepPeR]

hi doc pepper you seem to know the UITF like the back of your hand.

 

if you were to choose which bank does give the best service, and rates for the UITF? i am also planning to get one.

 

In terms of service, you should go to the bank branch you are more comfortable with. Remember that UITF is the only trust product that is available through the brances so if service is what you're after, choose the branch of a bank that values you as a client. In terms of rates, it depends on the performance of the NAVPUs. My own personal bias is Metrobank but it depends on which UITF product. Their high end peso and dollar funds seem to be doing well.

 

^ I suggest BDO...

 

Nothing wrong with BDO itself but make sure the branch personnel know what they are talking about when you ask them about UITFs. Just my opinion but most of the UITF panic that happened last May was due to the mis-marketing of the UITF products by their branch personnel. Take a look at the performance of their UITFs from May, 2006 as they were one of the hardest hit during that black week of May.

[CodenameV]

I tried both Metrobank and BDO. During May, i had to pullout from the Metrobank starter fund since there was no clear explanation for the sudden decline in NAV. It has since recovered to its peak value. However, my place of work is far from Ortigas and Makati so I can't really deal with their Trust people directly. The branch personnel can't really provide the weekly information updates on the developments and breakdown of where the trust fund is currently invested (either FXTN's, bank placements, stocks, etc.)

 

In BDO, I have placements in their $MMF which was not affected by the May decline which mostly struck bond based trust funds. I've since had placements in $BF and PBF which have done relatively well for the past month. I also appreciate the weekly updates i get through email.

[Dr_PepPeR]

I tried both Metrobank and BDO. During May, i had to pullout from the Metrobank starter fund since there was no clear explanation for the sudden decline in NAV. It has since recovered to its peak value. However, my place of work is far from Ortigas and Makati so I can't really deal with their Trust people directly. The branch personnel can't really provide the weekly information updates on the developments and breakdown of where the trust fund is currently invested (either FXTN's, bank placements, stocks, etc.)

 

In BDO, I have placements in their $MMF which was not affected by the May decline which mostly struck bond based trust funds. I've since had placements in $BF and PBF which have done relatively well for the past month. I also appreciate the weekly updates i get through email.

 

Thank you for sharing your experiences sir. Sometimes it is also a matter of how your branch services you. Unfortunately, branch service has nothing to do with NAVPUs.

[CodenameV]

I don't really place much importance in branch services as UITF's are a complicated investment product. What i value is transparency, availablity of information & analysis and flexibility. BDO's UITF's are flexible as they have different products according to your risk preference and currency. From my experience, Metrobank does not have that flexibility and transparency.

[Dr_PepPeR]

I don't really place much importance in branch services as UITF's are a complicated investment product. What i value is transparency, availablity of information & analysis and flexibility. BDO's UITF's are flexible as they have different products according to your risk preference and currency. From my experience, Metrobank does not have that flexibility and transparency.

 

Thank you for your insights. Metrobank used to be #1 in terms of CTF/UITF products. Not surprising based on their client demographics since CTF/UITFs are personal (individual) products rather than corporate, and most of the CTF/UITF are of chinese descent. These clients normally place their money based on trust of the branch manager/area head which was my basis for saying that branch service is the criterion for some people.

 

If I may ask a question, are you able to deal directly with BDO's Trust Department?

 

One more suggestion. If your funds are sizeable enough, something like Php 5MM or more, think about opening a Living Trust Account wherein you can customize the investments and the disposition of the fund, you get an account officer to deal with and the possibility of getting tax-exempt rates if you keep the investments for more than five (5) years.

[CodenameV]

Dr. Pepper,

I am sure you know more about UITF's than I do since I only started going into trust related investment products this year. Just sharing my experience and some lessons i have learned. I have talked to BDO's trust department before and they also send me a weekly update on the performance of the various UITF's as well as an economic outlook. Since I want to have some sort of control over my investments and somewhat educated in investment management, I tend to handle my investments directly rather than rely on the advice of branch managers. I actually diversify my portfolio into UITF's, stocks and time deposits.

 

One of my colleagues in the office was the one who was advising me to go into UITF's and actually recommended HSBC to me. Since there is no HSBC branch near my place of work, I could only choose Metrobank and BDO. Also, he has had bad experiences in dealing with Citibank's trust department so they're also not recommended.