In he previous post we took a look at index funds: what they are and their pros and cons. There are a number of index funds available to Filipino investors. Let's start with BPI's offerings.
First up is a bond index fund: the ABF Philippines Bond Index Fund. This is a bit different from the examples in the last post in that it tracks a bond index instead of an equity index. It tracks the iBoxx Philippines Index. Here's the key information as of the time of writing:
ABF Philippines Bond Index Fund
Fund Type: UITF
Index Tracked: iBoxx Philippines Index
Minimum Initial Investment: P10000
Minimum Transaction: P1000
Minimum Holding Period: None
Annual Fee: ~ 0.349%
Tracking Error (from June 2012): ~ 0.2%
Explanatory Memo
Performance Report for June 2014
The fees and tracking error are quite low, which is a good thing.
Next is an equity index fund:
BPI Philippine Equity Index Fund
Fund Type: UITF
Index Tracked: Philippine Stock Exchange Index
Minimum Initial Investment: P10000
Minimum Transaction: P1000
Minimum Holding Period: None
Annual Fee: ~ 1.5%
Tracking Error (from June 2012): ~ 2.27%
Explanatory Memo
Performance Report for June 2014
The fee isn't as low as what I'd expect of an index fund. The tracking error is much higher than that of the bond index fund above, but I'm not sure if it's too high or okay.
Next is another equity index fund, the ALFM Philippine Stock Index Fund. This differs from the other equity fund in that it is a mutual fund managed by BPI Investment Management Inc., a subsidiary of BPI. As such it is regulated under the SEC instead of the BSP.
ALFM Philippine Stock Index Fund
Fund Type: MF
Index Tracked: Philippine Stock Exchange Index
Minimum Initial Investment: P5000
Minimum Transaction: P1000
Minimum Holding Period: 180 days
Annual Fee: ~ 1.5%
Early Redemption Fee: 1% of the redemption amount
Tracking Error (from June 2012): ~ 0.88%
Prospectus
Performance Report for June 2014
I'm not a big fan of minimum holding periods and early exit fees but 180 days is short compared to some mutual funds. Invest only if you have an emergency fund already setup. The annual fee is comparable to the other equity index fund above, but the tracking error is much better.
Lastly there's the Philippine Dollar Bond Index fund:
Philippine Dollar Bond Index Fund
Fund Type: UITF
Index Tracked: JP Morgan Asia Credit Index – Philippines
Minimum Initial Investment: $500
Minimum Transaction: $200
Minimum Holding Period: None
Annual Fee: ~ 0.267%
Tracking Error (3-year): ~ 1.06%
Explanatory Memo
Performance Report for June 2014
The investment and transaction amounts required are pretty high. The fees are quite low and the tracking error isn't that bad.
That's all for BPI. Next on the index fund list is Philequity and First Metro.
Showing posts with label uitf. Show all posts
Showing posts with label uitf. Show all posts
Sunday, July 20, 2014
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:
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 - uitf.com.ph - has a lot of information
Mutual Funds - pifa.com.ph - not much information aside from NAVPS performance
Winner: UITFs
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
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 - uitf.com.ph - has a lot of information
Mutual Funds - pifa.com.ph - not much information aside from NAVPS performance
Winner: UITFs
Thursday, March 13, 2014
New investment: BPI Short Term Fund
New post, hooray!
After a couple of years I was finally able to invest again. This time I decided to try BPIs UITF offerings. I needed a fund where I could park money relatively safely. I say relatively since it isn't a bank deposit and therefore isn't insured by the PDIC.
I chose the BPI Short Term Fund. According to the description
What I like about this fund:
After a couple of years I was finally able to invest again. This time I decided to try BPIs UITF offerings. I needed a fund where I could park money relatively safely. I say relatively since it isn't a bank deposit and therefore isn't insured by the PDIC.
I chose the BPI Short Term Fund. According to the description
It is suitable for investors with a moderately conservative risk profile and those with short-term liquidity requirements.which I interpret to mean "it's good for money you can't afford to lose (money you might need in the near future)". It also means the gains are going to be made very slowly. Some people would say that the combination of BPIs conservatism and a conservative fund means that it's going to be very very slow. That's okay though, this fund is for building slowly. I plan on investing in more aggressive funds in the near future (I hope).
What I like about this fund:
- Low initial participation: P10,000
- Low additional participation: P1,000
- No minimum holding period
- Low fee: 0.5% per annum
Friday, July 1, 2011
UITF Roundup 3: Metrobank
Third in our UITF series is Metrobank. You might have noticed there isn't an "Early Redemption Fee" column in the table below. That's because the fee is uniform across all their funds. They charge 50% of the income on the redeemed amount. So if you redeem early and profit by P2000, they take P1000 as the early redemption fee. The holding periods aren't too long so this shouldn't be an issue for most investors.
Aside from the Trust Fee listed below Metrobank also charges a Custodian Fee. This is 0.015% p.a. for peso funds and 0.0175% p.a. for dollar funds.
Main Office Phone: 8700-700
Website: Metrobank UITFs
Aside from the Trust Fee listed below Metrobank also charges a Custodian Fee. This is 0.015% p.a. for peso funds and 0.0175% p.a. for dollar funds.
Fund Type
Minimum Investment/ Subsequent Investment
Holding Period
Trust Fee*
Money Market
P50,000 / P25,000
7 days
1% p.a.
Max-3 Bond Fund
P50,000 / P25,000
30 days
1% p.a.
Max-5 Bond Fund
P50,000 / P25,000
30 days
1.5% p.a.
Invest Plus
P5,000 /
P1,500 monthly
90 days
2.5% p.a.
Balanced Fund
P25,000 / P25,000
90 days
2% p.a.
Equity Fund
P25,000 / P25,000
90 days
2% p.a.
$ Money Market Fund
$2000 / $1000
45 days
1% p.a.
$ Max-3 Bond Fund
$2000 / $1000
90 days
1.5% p.a.
$ Max-5 Bond Fund
$2000 / $1000
90 days
1.5% p.a.
Main Office Phone: 8700-700
Website: Metrobank UITFs
Saturday, June 25, 2011
UITF Roundup 2: BPI
Here's the second installment of the UITF roundup. Today's featured bank is Bank of the Philippine Islands.
BPI offers a Regular Subscription Plan that allows investors to make regular purchases of units or shares. Purchases may be made on a monthly or a quarterly basis. This makes cost averaging a lot more convenient. Read more.
*Some of the funds may charge minimal management fees, custodianship fees, and external audit fees aside from the trust fees. The fees listed below under the "Annual Fee" column are the trust fees. Be sure to read the funds' Explanatory Memo and Latest Fund Performance report (links provided below the fund name).
Contact Numbers, Wealth Management Division: 845-5295, 816-9092
Website: BPI Asset Management Products and Services
Roundup 1: BDO
BPI offers a Regular Subscription Plan that allows investors to make regular purchases of units or shares. Purchases may be made on a monthly or a quarterly basis. This makes cost averaging a lot more convenient. Read more.
*Some of the funds may charge minimal management fees, custodianship fees, and external audit fees aside from the trust fees. The fees listed below under the "Annual Fee" column are the trust fees. Be sure to read the funds' Explanatory Memo and Latest Fund Performance report (links provided below the fund name).
Fund Type
Minimum Investment/ Subsequent Investment
Holding Period
Early Exit Fee
Annual Fee*
Short Term Fund (Money Market)
P10,000/
P1,000
7 days
0.25%
0.75% p.a.
Explanatory Memo
May 2011 Performance Report
Premium Bond Fund
P10,000/
P1,000
90 days
0.25%
1.5% p.a.
Explanatory Memo
May 2011 Performance Report
ABF Philippines
Bond Index Fund
P10,000/
P1,000
90 days
1%
0.08% p.a.
Explanatory Memo
May 2011 Performance Report
Balanced Fund
P10,000/
P1,000
90 days
0.50%
1.5% p.a.
Explanatory Memo
May 2011 Performance Report
Equity Fund
P10,000/
P1,000
90 days
0.50%
1.5% p.a.
Explanatory Memo
May 2011 Performance Report
International
Fund Plus
$500/
$200
30 days
0.25%
0.75% p.a.
Explanatory Memo
May 2011 Performance Report
Global Philippine Fund
$500/
$200
30 days
0.25%
1% p.a.
Explanatory Memo
May 2011 Performance Report
Philippine Dollar Bond Index Fund
$500/
$200
90 days
0.25%
0.25% p.a.
Explanatory Memo
May 2011 Performance Report
Global Equity Fund
$500/
$200
90 days
1%
1.5% p.a.
Explanatory Memo
May 2011 Performance Report
Contact Numbers, Wealth Management Division: 845-5295, 816-9092
Website: BPI Asset Management Products and Services
Roundup 1: BDO
Sunday, June 5, 2011
UITF Roundup 1: BDO
As promised here's the roundup of UITFs. We'll start with Banco de Oro. I made a table based on the information on their website:
Contact Numbers: Trunkline: 840-7000, Trust Department: 878-4271, 878-4217, 878-4218
The minimum investment amounts are higher than in mutual funds, but there are no sales loads and the annual fees are lower. These are significant advantages that will reflect on long-term performance.
Since each subsequent investment is treated as a new investment, the higher minimum investments might put off those who want to invest small sums regularly. The easy investment plan allows investors to invest as little as P1000 per month. This is invested at the NAVPU for that day. When the total investment amount reaches the minimum (for example P10,000 for the equity fund), the investor is then issued the investment certificate. In this way it is possible to do cost averaging. Here's a link to their money market fund. There are links to the other funds on the right side of that page.
Related reading:
UITFs
UITFs vs. Mutual Funds
Fund Type
Minimum Investment
Holding Period
Early Exit Fee
Annual Fee
Peso Money Market
P100000
none
none
0.50% p.a.
Peso Bond
P100,000
30 days
0.50%
0.75% p.a.
Peso Government Securities
P100,000
30 days
0.50%
1% p.a.
Peso Fixed Income
P10,000
30 days
0.50%
1% p.a.
Peso Balanced
P10,000
30 days
0.50%
1% p.a.
Peso Equity
P10,000
30 days
1%
1% p.a.
Dollar Money Market
$2000
45 days
0.50%
0.50% p.a.
Dollar Bond
$2000
45 days
0.50%
0.75% p.a.
Dollar Medium-Term Bond
$2000
45 days
1%
1% p.a.
Contact Numbers: Trunkline: 840-7000, Trust Department: 878-4271, 878-4217, 878-4218
The minimum investment amounts are higher than in mutual funds, but there are no sales loads and the annual fees are lower. These are significant advantages that will reflect on long-term performance.
Since each subsequent investment is treated as a new investment, the higher minimum investments might put off those who want to invest small sums regularly. The easy investment plan allows investors to invest as little as P1000 per month. This is invested at the NAVPU for that day. When the total investment amount reaches the minimum (for example P10,000 for the equity fund), the investor is then issued the investment certificate. In this way it is possible to do cost averaging. Here's a link to their money market fund. There are links to the other funds on the right side of that page.
Related reading:
UITFs
UITFs vs. Mutual Funds
Saturday, April 9, 2011
UITFs vs. Mutual Funds!
Update: there is a newer version of this comparison here. Also, the URL for the mutual funds association website has changed and been updated for both posts.
Here's a point-by-point comparison of UITFs vs. Mutual Funds.
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: Mutual Funds, for now
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 - Not allowed
Mutual Funds - Allowed
Winner: Mutual Funds
11. Management Fee:
UITFs - As low as 0.25%
Mutual Funds - As low as 1%
Winner: UITFs
12. Website:
UITFs - uitf.com.ph - Ugly colors, good uptime, loads of information
Mutual Funds - pifa.com.ph - Clean look, not so good uptime, not much information aside from NAVPS performance
Winner: UITFs
Overall, I think UITFs win. The fees are lower and the holding times are shorter. I think performance will be the roughly the same, maybe with UITF NAVPUs doing better than mutual fund NAVPS because of the lower management fees.
My only concern is that the subsequent investment requirement is higher. That means it's harder to cost average with UITFs than with mutual funds.
*However I talked to a bank representative and she informed me that their bank now accepts subsequent investments of as low as P1000. If other banks follow suit then mutual funds will lose that advantage.
Does that mean mutual fund investors should move their investments to UITFs? No, I think it would be a good idea to invest in both, to minimize risk.
Here's a point-by-point comparison of UITFs vs. Mutual Funds.
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: Mutual Funds, for now
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 - Not allowed
Mutual Funds - Allowed
Winner: Mutual Funds
11. Management Fee:
UITFs - As low as 0.25%
Mutual Funds - As low as 1%
Winner: UITFs
12. Website:
UITFs - uitf.com.ph - Ugly colors, good uptime, loads of information
Mutual Funds - pifa.com.ph - Clean look, not so good uptime, not much information aside from NAVPS performance
Winner: UITFs
Overall, I think UITFs win. The fees are lower and the holding times are shorter. I think performance will be the roughly the same, maybe with UITF NAVPUs doing better than mutual fund NAVPS because of the lower management fees.
My only concern is that the subsequent investment requirement is higher. That means it's harder to cost average with UITFs than with mutual funds.
*However I talked to a bank representative and she informed me that their bank now accepts subsequent investments of as low as P1000. If other banks follow suit then mutual funds will lose that advantage.
Does that mean mutual fund investors should move their investments to UITFs? No, I think it would be a good idea to invest in both, to minimize risk.
Wednesday, April 6, 2011
Tax Season: Are mutual fund, UITF, or stock trading gains taxable?
It's that time of the year again. Tax season! Hooray! Don't forget to file your tax returns, you don't want to be slapped with penalties by the BIR. Quarterly income tax for the first quarter of 2011 and annual income tax for 2010 are due on April 15. For other tax deadlines check my Squidoo page: BIR deadlines.
Are gains from mutual funds, UITFs, or stock trading taxable? It is my understanding that gains from any of these need not be declared and are not taxed.
On the BIR website it lists "gain from redemption of shares in mutual fund" as excluded from gross income. Check here. Search the page for "mutual fund".
Several documents online also argue that UITF redemptions are already subject to final withholding tax, therefore the investor need not pay any more taxes. Check with your bank if they do withhold the necessary taxes.
Buying and selling of shares on the PSE are taxed 0.005% per transaction. Selling shares are taxed an additional 0.005% sales tax. Broker's commissions are taxed with 12% VAT. All these are already factored in when trading on the PSE. As far as I can tell there are no other taxes required to be paid.
Trading shares off the PSE are taxed 5% on transactions up to P100,000. Amounts in excess of P100,000 are taxed 10%.
Disclaimer: I am not a lawyer nor an accountant. I do my best to ensure that I present complete and accurate information, but it is up to the reader to evaluate and confirm that information. In addition tax laws and regulations may change. This blog is not a replacement for legal or accounting advice.
Are gains from mutual funds, UITFs, or stock trading taxable? It is my understanding that gains from any of these need not be declared and are not taxed.
On the BIR website it lists "gain from redemption of shares in mutual fund" as excluded from gross income. Check here. Search the page for "mutual fund".
Several documents online also argue that UITF redemptions are already subject to final withholding tax, therefore the investor need not pay any more taxes. Check with your bank if they do withhold the necessary taxes.
Buying and selling of shares on the PSE are taxed 0.005% per transaction. Selling shares are taxed an additional 0.005% sales tax. Broker's commissions are taxed with 12% VAT. All these are already factored in when trading on the PSE. As far as I can tell there are no other taxes required to be paid.
Trading shares off the PSE are taxed 5% on transactions up to P100,000. Amounts in excess of P100,000 are taxed 10%.
Disclaimer: I am not a lawyer nor an accountant. I do my best to ensure that I present complete and accurate information, but it is up to the reader to evaluate and confirm that information. In addition tax laws and regulations may change. This blog is not a replacement for legal or accounting advice.
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!
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!
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