Monday, March 28, 2011

Unit Investment Trust Funds

Before I started investing last year I did some research on Unit Investment Trust Funds (UITFs) and mutual funds. I eventually decided to go with mutual funds. Yesterday I did more research on UITFs for a new Squidoo page. I found that they're a lot like mutual funds. UITFs also pool investors' money and invest in stocks, bonds and other securities. The types of funds available are also virtually the same: money market, bond, balanced, and equity.

So what are the differences? UITFs are bank products, thus they are regulated by the Bangko Sentral ng Pilipinas (BSP). Investors buy units of the fund at a price called the Net Asset Value Per Unit (NAVPU). The fee structure is also different, there is an annual management fee, but no front-end sales loads. There are holding periods, usually from 30 to 90 days long. If the investment is redeemed an early redemption fee is charged. The charge is lower than most mutual funds' back-end sales loads. Partial redemptions of UITFs are not allowed, the entire investment must be redeemed.
Subsequent investments are treated as new investments, thus the minimum investment amount is the same. For example, if the UITF minimum investment is P10,000 then the investor must invest at least P10,000 every time he or she wishes to invest. Some banks have a mechanism where an investor may invest lower amounts, more on this in a future post.

This is my research in a nutshell. UITFs look like an attractive addition to any Filipino investor's portfolio. I'll do a "UITFs vs. Mutual Funds" post in the near future. Stay tuned!


  1. You article, on MONDAY, MARCH 28, 2011
    Unit Investment Trust Funds


    That is very good, sir, even though it was written two years ago, but I still find it very informative.

    Thanks, and I will read everything here you write about how to make money from money.


    1. Thanks! I hope to start posting regularly again soon.