Sunday, April 6, 2014

UITF vs. Mutual Funds, Revisited

A few years back I wrote a post comparing UITFs and Mutual Funds here.

I think it's time to update that comparison.
Here's a summary of the changes from the last article:
  • UITF subsequent investment amount can be as low as P1000
  • some UITFs now allow partial redemption
  • Mutual fund website URL has changed
Verdict is still the same: UITFs win.  The combination of low fees, short holding periods, and now the ability to invest and redeem partial amounts make UITFs a clear winner over mutual funds.
Still, don't count mutual funds out of your diversification strategy.

Here's the complete comparison.  Asterisks denote items that have been updated:

1. Government Regulatory Agency:

UITFs - Bangko Sentral ng Pilipinas
Mutual Funds - Securities and Exchange Commission
Winner: tie

2. Issuing Companies:

UITFs - Banks
Mutual Funds - Insurance companies, investment companies
Winner: tie

3. Fund Types:

Both offer the essentially the same fund types: money market, bond, balanced, equity.
Winner: tie

4. Risk:

Since both have the same types of investments the risks are the same.
Winner: tie

5. Minimum Investment Amount:

UITFs - as low as P10,000
Mutual Funds - as low as P5,000
Winner: Mutual Funds

6. Subsequent Investment Amount*:

UITFs - as low as P1,000
Mutual Funds - as low as P1,000
Winner: tie

7. Front-end Sales Load:

UITFs - None
Mutual Funds - As low as 0%
Winner: UITFs

8. Holding Period:

UITFs - As low as 0 days
Mutual Funds - As low as 0 days if front-end load is charged
Winner: UITFs

9. Back-end Sales Load:

UITFs - None, if redemption is made after the holding period
Mutual Funds - As low as 0%, if redemption is made after the holding period
Winner: tie

10. Partial Redemption*:

UITFs - Allowed
Mutual Funds - Allowed
Winner: tie

11. Management Fee:

UITFs - As low as 0.25%
Mutual Funds - As low as 1%
Winner: UITFs

12. Website*:

UITFs - - has a lot of information
Mutual Funds - - not much information aside from NAVPS performance
Winner: UITFs

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