Unit Investment Trust Funds (uitf)

[parbust3r]

Sorry, it would take P4,000,000 at 6% p.a. to net P20k monthly.

[Dr_PepPeR]

doc pepper, i'm planning to invest a small amount of cash 50k to 100k. I'm just not sure where to put my investment, i'm choosing from either the UITF or a mutual fund? can you give the pros and cons for both choices? appreciate your help. thanks so much!

 

My personal choice is UITF. For one, the fees are smaller. A MF have to set up a corporation, pay for commissions, advertising, operations etc while a bank just uses its existing resources and just charges a management fee. MFs are regulated by the SEC while UITFs are regulated by the Central Bank. Which agency knows more about investments? Finally, most MFs also let the banks manage their funds, so why go through an intermediary when you can go direct. Bottom line is, what do you get for your investments?

 

thanks sir. for one, i have no knowledge of trading in stocks and bonds. Im investing in UITFs and equity mutual funds for preservation of capital and a little profit. Im in it for the long term meaning more than 5 years.

Im very much concerned about my estate if and when death occurs though. Id like to avoid estate and any other taxes that heirs may have to pay. Can you advise sir?

I see you frequent places in Makati. We can meet up in any place here and afterwards maybe a cup of coffee.

Let me know sir.

 

If you have a five year investment horizon, I suggest opening a trust account. You can tailor fit the investment outlets depending on the availability when you open. Than there is also the tax-exempt status if you hold onto it for 5 years. For estate tax concerns, just make it a joint trust account with a survivor clause. Yes, I can meet you in Makati after work for a cup of coffee. I'll try to get in touch when I pass by that area.

 

Sorry, it would take P4,000,000 at 6% p.a. to net P20k monthly.

 

You're quite correct. Please forgive me my lack of math skills.

[qrv777]

My personal choice is UITF. For one, the fees are smaller. A MF have to set up a corporation, pay for commissions, advertising, operations etc while a bank just uses its existing resources and just charges a management fee. MFs are regulated by the SEC while UITFs are regulated by the Central Bank. Which agency knows more about investments? Finally, most MFs also let the banks manage their funds, so why go through an intermediary when you can go direct. Bottom line is, what do you get for your investments?

If you have a five year investment horizon, I suggest opening a trust account. You can tailor fit the investment outlets depending on the availability when you open. Than there is also the tax-exempt status if you hold onto it for 5 years. For estate tax concerns, just make it a joint trust account with a survivor clause. Yes, I can meet you in Makati after work for a cup of coffee. I'll try to get in touch when I pass by that area.

You're quite correct. Please forgive me my lack of math skills.

 

dr_pepper: among the UITF option sa BDO, ano ang ok na ngayon? Presently, I have two UITF ng BDO, PMMF and DMMF... Ok na ba ang peso bond fund or fixed income?

[Dr_PepPeR]

dr_pepper: among the UITF option sa BDO, ano ang ok na ngayon? Presently, I have two UITF ng BDO, PMMF and DMMF... Ok na ba ang peso bond fund or fixed income?

 

Different UITFs are available in large banks to cater to different client investment horizons, risk appetites, investment objectives and familiarity with investment instruments. When you can profile yourself based on the said criteria, then it will be easier to recommend which of the BDO UITFs would be OK for you. Incidentally, the Peso and US Dollar UITFs are entirely different creatures.

[CodenameV]

Dr. Pepper is right. You have to first specify your priorities with regards to your objectives with regards to your investments. the $ and P MMF are for risk adverse/conservative investors who are more concerned for capital preservation and long term appreciation. Proof of that happened last May when other UITF's NAV values went down while the $MMF was unaffected and still exhibited some growth. However, its growth increments are far less than the other UITF's in BDO's stable. The P BF was heavily affected by last May's heavy withdrawals but has exhibited increasing growth in NAV values for the past 2 months.

[qrv777]

Dr. Pepper is right. You have to first specify your priorities with regards to your objectives with regards to your investments. the $ and P MMF are for risk adverse/conservative investors who are more concerned for capital preservation and long term appreciation. Proof of that happened last May when other UITF's NAV values went down while the $MMF was unaffected and still exhibited some growth. However, its growth increments are far less than the other UITF's in BDO's stable. The P BF was heavily affected by last May's heavy withdrawals but has exhibited increasing growth in NAV values for the past 2 months.

 

 

these are extra money.... (dead money for us) meaning its ok to have it invested for two - five years.... without spending it... mga 1M lang combine.. hehe (maliit lang po)

[Dr_PepPeR]

these are extra money.... (dead money for us) meaning its ok to have it invested for two - five years.... without spending it... mga 1M lang combine.. hehe (maliit lang po)

 

If you don't plan to touch the money for two to five years, for UITF I would suggest that you put it in a balanced fund like the BDO Balanced Fund, or a UITF that has a combination of both stocks (equities) and fixed income outlets; or the BDO Bond Fund, which has longer term fixed income securities. They would tend to get the highest returns over something like 2 - 5 years. If you have about P1 Million, you might want to try putting that in a Treasury or Trust product that you can leave for five years, since this becomes tax exempt.

[jopoc]

im not really good into investments and money market or the likes. i really hate those jargons and technicailities. hehehe

 

but i would like to ask, if i invest for.. say, the minimum, would it be ok that i regularly add the investment as if i am depositing in a bank regularly

 

to illustrate, i invest 50k, and monthly i add 10k. is that allowed?

[qrv777]

im not really good into investments and money market or the likes. i really hate those jargons and technicailities. hehehe

 

but i would like to ask, if i invest for.. say, the minimum, would it be ok that i regularly add the investment as if i am depositing in a bank regularly

 

to illustrate, i invest 50k, and monthly i add 10k. is that allowed?

 

BDO Peso Money Market pwede yan.. 10K lang at ang minimum requirement and you can add anytime since you can pull out your investment any time unlike the other UITF investment na may holding period na 30 days.

Edited October 18, 2006 by qrv777

[qrv777]

correction lang sa previous post ko.. yung PMMF minimum investment 100,000.00

[Dr_PepPeR]

im not really good into investments and money market or the likes. i really hate those jargons and technicailities. hehehe

 

but i would like to ask, if i invest for.. say, the minimum, would it be ok that i regularly add the investment as if i am depositing in a bank regularly

 

to illustrate, i invest 50k, and monthly i add 10k. is that allowed?

 

Yes, that is allowed for most UITF products. The minimum initial subscription and minimum addtional subscription amounts are stated in the advert materials.

 

If you hate jargon and technicalities, what more do other people think when we talk in legalese?

[tanjose]

A PRIMER ON... UNIT INVESTMENT TRUST FUNDS

 

Q: What is a Unit Investment Trust Fund (UITF)?

A: UITF is a pooled investment fund that commingles the monies of investors into a single dynamic portfolio of investments and made available by units of participation. The units of participation will be based on the price of the fund on date of purchase. The UITF was created by the issuance of BSP Circular 447 to align the management of pooled investment funds with global standards.

 

Q: How is the price of the fund computed?

A: The price of the fund is the Net Asset Value Per Unit (NAVPU). The NAVPU is equal to Net Asset Value (NAV) divided by the outstanding units of participation in the fund.

 

Q: What is Net Asset Value (NAV)?

A: NAV is the total market value of the financial instruments of the fund less expenses such as taxes, fees and other qualified operating expenses.

 

Q: Why is market price used for valuing the financial instruments of the fund?

A: UITF employs global standards by using a mark-to-market (MTM) valuation method for all financial instruments of the fund. This means instruments are valued daily against end of day market prices. It provides equitable treatment to investors coming in and out of the fund because it offers a fair price for the purchase and redemption of units of participation.

 

Q: Is investing in UITFs safe?

A: Yes. Investments will be limited to high-grade and highly-liquid instruments such as time deposits government securities. However, because of the valuation method used, an investor may be exposed to price risk when he redeems, if interest rates are volatile. Client can defer redemption until market conditions become more favorable. It should be noted that exposure to price risk in UITFs is the same as in other long-term investments.

 

Q: What are the benefits of participating in UITFs?

A: A: Investors can enjoy several benefits:

 

Ability to participate in high-yielding long-term financial instruments in the fund but will not necessarily lock up client's money.

 

With a minimum required contribution, participants can enjoy a wide selection of financial instruments and thus minimizing risks. Clients have the opportunity to access different instruments not normally available to retail investors.

 

Opportunity for higher returns due to possible capital gains on top of accrued income.

 

Pool of funds can reduce transactional costs bringing potential savings.

 

Q: What are the other global standards used by the UITF?

A: An accredited BSP 3rd party custodian will safekeep the securities of the fund while an independent auditor acceptable to the BSP will audit each UITF annually.

 

Q: How will an investor know where the fund is invested?

A: A list of prospective and outstanding financial instruments of the fund will be made available at the Head Office of Asiatrust Bank.

 

Q: How can an investor compare the performance of their trustee bank versus others?

A: At least once a week, all trustee banks will publish in major dailies, the performance of the fund, which include the latest NAVPU and the Return on Investment.

 

Q: Why cannot an indicative rate be quoted?

A: Indicative rates cannot be quoted because of the valuation method used.

 

Q: What will an investor receive to evidence his participation?

A: An investor will be receiving a Confirmation of Participation that indicates the name of investor, value date, NAVPU, currency amount of investment and the number of units pruchased.

 

Q: What is an ideal minimum investment horizon for UITF?

A: We are encouraging a minimum investment horizon of at least one (1) year because the fund has opportunities for higher returns due to possible capital gains on top of accrued income.

 

Q: When can an investor withdraw his investment?

A: Investors may withdraw after the minimum holding period of the UITF has been met. The investor can still redeem his investment even before the required minimum holding period but subject to an exit fee.

 

Q: Why is there a need to impose an exit fee?

A: The exit fee will be used to defray the processing cost of the client's pretermination in the fund.

 

You may post here or PM me for any questions. Thanks for looking.

How much is the minimum amount of allowable investment? Does the Bank give us a monthly update on the status of our investment?

[parbust3r]

How much is the minimum amount of allowable investment? Does the Bank give us a monthly update on the status of our investment?

 

 

minimum is different for all the products. youll have to do a little research on the product that you want to get into.

Uitfs and Mutual Funds have webpages and you can check the status daily onlinne.

[Talley]

Good day All,

 

For those interested in UITF's and Mutual Funds, here are a couple of sites for you.

 

http://www.uitf.com.ph/ <--- if you want to check the returns of different UITF's

 

http://www.icap.com.ph/factsfignavps.asp <--- if you want to check the returns of differnt Mutual Funds

 

Have a good day people.

 

Carpe Noctem

[Guest wackeen]

UITF's are complicated, but they are intended to simplify one thing: fund management. If you believe you can grow your money by making your own decisions on asset allocation (or going into business) then this is not for you.

 

UITF is about relinquishing control and entrusting that 1) the expertise of the bank's fund managers and 2) the buying power of a large pool of funds you are throwing your money into, will together result in larger long-term returns. If you want a guaranteed return, then this is also not the right product for you. Having to worry about a guaranteed return affects how the fund is managed, and prudence will result in lower yields in the long run.

 

Ignoring the mismanagement of the pre-need companies, the nature of their 'guaranteed' products forced them to keep paying out much more than their original payments could have grown to, no matter how these were invested. This jeopardized the funding for future availments and companies only admitted they could not honor future commitments even if they saw this coming years ago.

 

The UITF is immune from this problem in that by its unitized nature you know that what you pay when you subscribe and what you receive when you redeem are your 'fair' share of the funds. If the value goes down, your money will only be lost if you choose to pull out at that time (like leaving the blackjack table after some bad hands).

 

Just my opinion.. please correct me if I misunderstand.