May 23, 2024

How Much Can You Earn In Investing In UITF – Peso Lab

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Unit investment trust fund or UITF is a one of the many ways any Pinoy can actually invest to earn passive income. It is offered by banks and trust companies with most of them offering online access, making them really easy to open and manage.

But how much can you expect to earn?

This a question that might be on your mind. And it makes sense to ask it. After all, you’re into investing because you’re expecting to gain from it.

In this article, I’m going to discuss the factors that affect your return on investment and a forecast of potential earnings.

UITF risk and return

The first thing that needs to be considered is the type of fund. Different funds have different goals, and this is translated to the securities that they acquire and hold to create value for investors.

And securities are not created the same. Some of them are risky, some are considered less so. Some may historically posted high returns, and others may be give modest returns.

See below the table of different fund types and their risk-return profile.

As you can see, both risk and return mirror each other. The higher the risk, the higher the potential return.

Unlike mutual funds, there are no sales load for UITFs so that’s a plus. But there are other charges and fees that you may need to consider.

Other factors that may also affect your potential gain from your investment are the following.

  • charges and fees
  • non-guaranteed returns

Effect of management fees on UITF earnings

For instance, most UITFs actually have management fee. It represents a portion of the entire value of the fund, and it is used to pay for the operation and management of the fund.

You don’t have to pay this out of pocket though, and it is computed into the net asset value per unit.

See below the list of UITFs with management fee. As you can see, it ranges from 0.15% to 2.5%.

FUND NAME TYPE MANAGEMENT FEE
AB CAPITAL BALANCED FUND Balanced 1.25%
ATRAM Global Multi-Asset Income Feeder Fund (PHP Unit Class) Balanced 0.95%
ATRAM US Multi-Asset Income Feeder Fund (PHP Unit Class) Balanced 0.95%
BDO PESO BALANCED FUND Balanced 1.00% p.a.
BPI Balanced Fund Balanced 1.50%  p.a.
Odyssey Diversified Capital Fund Balanced 1.50% p.a.
Odyssey Diversified Balanced Fund Balanced 1.50% p.a.
BPI Bayanihan Balanced Fund Balanced 0.30% p.a.
CHINA BANK BALANCED FUND Balanced 1.0% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day
CTBC Bank – ATRAM Philippine Balanced Feeder Fund Balanced 1.00%
Peso Investment Trust Fund Bond 1.25% per annum based on the Net Asset Value (NAV)
ATRAM Total Return Peso Bond Fund Bond 1.10% p.a.
ATRAM Global Bond Income Feeder Fund Bond 0.65% p.a.
DIVERSITY PESO BOND FUND Bond 1% p.a. based on the Net Asset Value (NAV) accrued daily
BDO MERIT FUND MEDIUM TERM PORTFOLIO Bond 0.825% p.a.
BDO GS FUND Bond 1.00% p.a. 
BDO MERIT FUND INTERMEDIATE TERM PORTFOLIO Bond 0.825% p.a.
BDO PESO BOND FUND Bond 1.00% p.a.
BDO PERA BOND INDEX FUND Bond 1.00% p.a. 
BPI Premium Bond Fund Bond 1.50% p.a.
ABF Philippines Bond Index Fund Bond 0.080% p.a. Trust Fee / 0.186% p.a. Management and Advisory Fee
Odyssey Peso Medium Term Bond Fund Bond 1.00% p.a.
Odyssey Peso Bond Fund Bond 1.00% p.a.
Odyssey Tax-Exempt Peso Fixed Income Fund Bond 1.00% p.a.
BPI Fixed Income Portfolio Fund-of-Funds Bond None: trust fees are collected at the Target Fund level.
CHINA BANK FIXED INCOME FUND (formerly CBC GS FUND) Bond 0.75% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day
CHINA BANK INTERMEDIATE FIXED-INCOME FUND Bond 0.50% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day
EastWest Peso Long Term Bond Fund Bond 1.0% p.a. of the market value of the fund
EastWest Peso Intermediate Term Bond Fund Bond 1% p.a. of the market value of the fund
LANDBANK Bond Fund Bond 1.00%
AB CAPITAL EQUITY FUND Equity 1.25% PA
Equity Investment Trust Fund Equity 1.25% per annum based on the Net Asset Value (NAV)
ATRAM Global Dividend Feeder Fund Equity 0.90% p.a.
ATRAM Asia Equity Opportunity Feeder Fund Equity 0.95% p.a.
ATRAM Global Technology Feeder Fund Equity 0.95%
ATRAM Global Financials Feeder Fund Equity 0.90% p.a.
DIVERSITY DIVIDEND FOCUSED FUND Equity 1.50% p.a. based on the Net Asset Value (NAV) accrued daily
BDO INSTITUTIONAL EQUITY FUND Equity 1.00% p.a.
BDO EQUITY FUND Equity 1.00% p.a.
BDO SUSTAINABLE DIVIDEND FUND Equity 1.25% p.a.
BDO FOCUSED EQUITY FUND Equity 1.50% p.a.
BDO ESG EQUITY FUND Equity 1.00% p.a.
BPI Equity Value Fund Equity 1.50% p.a.
Odyssey Philippine Equity Fund Equity 2.00% p.a.
Odyssey High Conviction Equity Fund Equity 2.50% p.a.
BPI Philippine High Dividend Equity Fund Equity 1.50% p.a.
BPI Philippine Infrastructure Equity Index Fund Equity 1.00% p.a.
BPI Philippine Consumer Equity Index Fund Equity 1.00% p.a.
BPI Catholic Values Global Equity Feeder Fund Equity 0.50% p.a.
CHINA BANK EQUITY FUND Equity 1.0% based on NAV before trust fee for the day
CHINA BANK HIGH DIVIDEND EQUITY FUND Equity 1.0% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day
EastWest PhilEquity Feeder Fund Equity 1.00% per annum
EastWest PhilEquity Institutional Feeder Fund Equity Fee is charged at the portfolio level
ATRAM Philippine Equity Smart Index Fund Equity 1.50% p.a.
BDO EQUITY INDEX FUND Index 1.00% p.a.
BDO PERA EQUITY INDEX FUND Index 1.00% p.a. 
BPI Philippine Equity Index Fund Index 1.00% p.a.
CTBC Bank – Sun Life Philippine Stock Index Feeder Fund Index 1.00%
EastWest PSEI Tracker Fund Index 0.75% p.a of the market value of the fund
AB CAPITAL SHORT-TERM FUND Money Market 0.375% p.a.
Peso Money Market Fund Money Market 0.30% per annum based on the Net Asset Value (NAV)
ATRAM Peso Money Market Fund Money Market 0.50% p.a.
DIVERSITY MONEY MARKET FUND Money Market 0.25% p.a.
BDO INSTITUTIONAL CASH RESERVE FUND Money Market None
BDO PESO MONEY MARKET FUND Money Market 0.50% p.a.
BDO PERA SHORT TERM FUND  Money Market 0.50% p.a. 
BDO SHORT TERM FUND Money Market 0.25% p.a.
BPI Short Term Fund Money Market 0.50% p.a.
BPI Money Market Fund Money Market 0.25% p.a.
CHINA BANK MONEY MARKET FUND Money Market 0.25% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day
CHINA BANK CASH FUND (formerly CBC INSTITUTIONAL MMF) Money Market 0.15%p.a. based on the Net Asset Value (NAV) of the Fund before trust fee for the day
CHINA BANK SHORT-TERM FUND Money Market 0.25% per annum based on the Net Asset Value (ANV) of the Fund before trust fee for the day
CTBC Money Market Fund Money Market 0.25%
UNLAD KAWANI MONEY MARKET FUND Money Market 0.05% p.a.
CLASS I – UNLAD PANIMULA MM FUND Money Market .15% p.a. 
CLASS II – UNLAD PANIMULA MM FUND Money Market .25% p.a. 
CLASS III – UNLAD PANIMULA MM FUND Money Market .30% p.a.
EastWest Peso Money Market Fund Money Market 0.25% p.a. of the market value of the fund
East West Peso Short Term Fund Money Market 0.25% p.a of the market value of the fund

But how does it actually affect your earnings? The higher the fee, the lower what you can expect to get from your investment.

In fact, we can make a comparison between different values of this fee. This way, you can get a better picture of how it impacts the growth of money over time.

The table below shows a projection of various funds with 0%, 0.15%, 1% and 2.50% fee with the following assumptions.

  • Time horizon is 30 years.
  • Initial 10,000 and monthly 1,000 investment.
  • The projection grows 10% compounded yearly rate.
YEAR DEPOSIT ZERO-FEE 0.15% 1% 2.50%
1 22,000 23,670 23,635 23,434 23,079
2 34,000 38,767 38,611 38,063 37,105
3 46,000 55,440 55,059 53,994 52,951
4 58,000 73,853 73,125 71,343 70,207
5 70,000 94,187 92,969 90,236 88,999
10 130,000 232,489 225,591 213,124 211,230
15 190,000 459,697 437,584 401,336 398,436
20 250,000 832,972 776,448 689,599 685,156
25 310,000 1,446,237 1,318,111 1,131,095 1,124,291
30 370,000 2,453,819 2,183,942 1,807,281 1,796,860

So over 30 years, you’ve saved P370,000 and with 10% yearly growth rate, you would have earned P2,453,819 if the fund has no fees.

And as the fees go higher, the lesser returns that you can possibly get.

The effect of exit fee on UITF earnings

Another charge that you have to be careful is the exit fee. It is a fee that is assessed in your account if you fail to hold on to your investment longer than the holding period.

The holding period is the shortest period of time that you are expected to let your investment be held with the fund. If you withdraw your money by redeeming units before the holding period is up, then the exit fee would be applicable.

See the table below for a summary funds, their holding period, and exit fee.

FUND NAME TYPE HOLD EXIT
AB CAPITAL BALANCED FUND Balanced 30 calendar 1.00% of the Principal
ATRAM Global Multi-Asset Income Feeder Fund (PHP Unit Class) Balanced 0 calendar none
ATRAM US Multi-Asset Income Feeder Fund (PHP Unit Class) Balanced 0 calendar none
BDO PESO BALANCED FUND Balanced 30 calendar 0.50% of the Original Participation Amount
BPI Balanced Fund Balanced 0 calendar None
Odyssey Diversified Capital Fund Balanced 0 calendar None
Odyssey Diversified Balanced Fund Balanced 0 calendar None
BPI Bayanihan Balanced Fund Balanced 0 calendar None
CHINA BANK BALANCED FUND Balanced 30 calendar 1.0% of the amount redeemed
CTBC Bank – ATRAM Philippine Balanced Feeder Fund Balanced 30 calendar 0.50%
Peso Investment Trust Fund Bond 30 calendar 0.50% of amount redeemed
ATRAM Total Return Peso Bond Fund Bond 30 calendar 1% of amount redeemed
ATRAM Global Bond Income Feeder Fund Bond 0 calendar none
DIVERSITY PESO BOND FUND Bond 30 calendar 5% of the redeemed amount
BDO MERIT FUND MEDIUM TERM PORTFOLIO Bond 0 calendar None
BDO GS FUND Bond 30 calendar 0.50% of the Original Participation Amount
BDO MERIT FUND INTERMEDIATE TERM PORTFOLIO Bond 0 calendar None
BDO PESO BOND FUND Bond 30 calendar 0.50% of the Original Participation Amount
BDO PERA BOND INDEX FUND Bond 30 calendar 1.00% of original participation amount
BPI Premium Bond Fund Bond 0 calendar None
ABF Philippines Bond Index Fund Bond 0 calendar None
Odyssey Peso Medium Term Bond Fund Bond 0 calendar None
Odyssey Peso Bond Fund Bond 0 calendar None
Odyssey Tax-Exempt Peso Fixed Income Fund Bond 0 calendar None
BPI Fixed Income Portfolio Fund-of-Funds Bond 0 calendar None
CHINA BANK FIXED INCOME FUND (formerly CBC GS FUND) Bond 30 calendar 1.0% of the amount redeemed
CHINA BANK INTERMEDIATE FIXED-INCOME FUND Bond 30 calendar 1.0% of the amount redeemed
EastWest Peso Long Term Bond Fund Bond 180 calendar PHP 500.00 or 0.25% of the withdrawn amount, whichever is higher
EastWest Peso Intermediate Term Bond Fund Bond 30 calendar PHP 500.00 or 0.25% of the withdrawn amount, whichever is higher
LANDBANK Bond Fund Bond 30 calendar 25% of net earnings (P500 minimum)
AB CAPITAL EQUITY FUND Equity 30 calendar 1.00% of the Principal
Equity Investment Trust Fund Equity 30 calendar 0.50% of amount redeemed
ATRAM Global Dividend Feeder Fund Equity 0 calendar none
ATRAM Asia Equity Opportunity Feeder Fund Equity 0 calendar none
ATRAM Global Technology Feeder Fund Equity 0 calendar none
ATRAM Global Financials Feeder Fund Equity 0 calendar none
DIVERSITY DIVIDEND FOCUSED FUND Equity 30 calendar 5% of the redeemed amount
BDO INSTITUTIONAL EQUITY FUND Equity 30 calendar 0.50% of the Original Participation Amount
BDO EQUITY FUND Equity 30 calendar 1.00% of the Original Participation Amount
BDO SUSTAINABLE DIVIDEND FUND Equity 30 calendar 1.00% of the Original Participation Amount
BDO FOCUSED EQUITY FUND Equity 30 calendar 1.00% of the Original Participation Amount
BDO ESG EQUITY FUND Equity 30 calendar 1.00% of the Original Participation Amount 
BPI Equity Value Fund Equity 0 calendar None
Odyssey Philippine Equity Fund Equity 0 calendar None
Odyssey High Conviction Equity Fund Equity 0 calendar None
BPI Philippine High Dividend Equity Fund Equity 0 calendar None
BPI Philippine Infrastructure Equity Index Fund Equity 0 calendar None
BPI Philippine Consumer Equity Index Fund Equity 0 calendar None
BPI Catholic Values Global Equity Feeder Fund Equity 0 calendar None
CHINA BANK EQUITY FUND Equity 30 calendar 1.0% of redemption proceeds
CHINA BANK HIGH DIVIDEND EQUITY FUND Equity 30 calendar 1.0% of the amount redeemed
EastWest PhilEquity Feeder Fund Equity 30 calendar PHP500 or 0.25% of the redemption proceeds whichever is higher
EastWest PhilEquity Institutional Feeder Fund Equity 0 calendar 0
ATRAM Philippine Equity Smart Index Fund Equity 0 calendar none
BDO EQUITY INDEX FUND Index 30 calendar 0.50% of the Original Participation Amount
BDO PERA EQUITY INDEX FUND Index 30 calendar 1.00% of the Original Participation Amount 
BPI Philippine Equity Index Fund Index 0 calendar None
CTBC Bank – Sun Life Philippine Stock Index Feeder Fund Index 30 calendar 1.00%
EastWest PSEI Tracker Fund Index 30 calendar P500.00 or 0.25% of redemption proceeds, whichever is higher
AB CAPITAL SHORT-TERM FUND Money Market 0 calendar NONE
Peso Money Market Fund Money Market 30 calendar 0.5% of amount redeemed
ATRAM Peso Money Market Fund Money Market 0 banking None
DIVERSITY MONEY MARKET FUND Money Market 30 calendar 5% of the redeemed amount
BDO INSTITUTIONAL CASH RESERVE FUND Money Market 0 calendar None
BDO PESO MONEY MARKET FUND Money Market 0 calendar None
BDO PERA SHORT TERM FUND  Money Market 30 calendar 0.50% of the Original Participation Amount 
BDO SHORT TERM FUND Money Market 0 calendar None
BPI Short Term Fund Money Market 0 calendar None
BPI Money Market Fund Money Market 0 calendar None
CHINA BANK MONEY MARKET FUND Money Market 3 banking 1.0% of the amount redeemed
CHINA BANK CASH FUND (formerly CBC INSTITUTIONAL MMF) Money Market 3 banking 1.0% of the amount redeemed
CHINA BANK SHORT-TERM FUND Money Market 3 banking 1.0% of the amount redeemed
CTBC Money Market Fund Money Market 30 calendar 0.50%
UNLAD KAWANI MONEY MARKET FUND Money Market 0 calendar None
CLASS I – UNLAD PANIMULA MM FUND Money Market 0 calendar None
CLASS II – UNLAD PANIMULA MM FUND Money Market 0 calendar None
CLASS III – UNLAD PANIMULA MM FUND Money Market 0 calendar None
EastWest Peso Money Market Fund Money Market 0 calendar None
East West Peso Short Term Fund Money Market 0 calendar Not applicable

UITF earnings with non-guaranteed returns

Lastly, your earnings from any UITF are non-guaranteed. They vary and are not insured at all, and that means that you enjoy all the gains and absorb any loss.

And that’s why that I am not going to use any past data to make forecast into the future. No past performance is going to actually predict any future earnings that you’re going to get.

But if you are so inclined, you may visit UITF PH website, which is maintained by the Trust Officers Association of the Philippines.

Instead, what could be done is to make a forecast using varying rate of returns. In the table below, the following assumptions are:

  • Management fee is not computed as it is assumed NAVPU would already reflect this value.
  • Initial 10,000 and monthly 1,000 investment.
  • Time horizon is 30 years.
YEAR DEPOSIT 4% 8% 12%
1 22,000 22,663 23,333 24,009
2 34,000 35,833 37,732 39,700
3 46,000 49,529 53,284 57,273
4 58,000 63,774 70,080 76,955
5 70,000 78,588 88,219 98,999
10 130,000 162,036 203,148 255,846
15 190,000 263,563 372,017 532,264
20 250,000 387,086 620,141 1,019,406
25 310,000 537,371 984,716 1,877,918
30 370,000 720,215 1,520,397 3,390,909

Summary

1. Choose a fund that suits your risk-return profile. Just because a fund is rated with high potential for growth does not mean that it is a best fit for you.

2. Choose a fund that has the least management fee. It’s going to help you in the long run.

3. To avoid paying the exit fee, you can choose to withdraw at the end of the holding period or choose a fund that does not have any holding period at all.

4. Your UITF earnings are non-guaranteed. The way that you can estimate how much you’re going to get in the future is to actually see the forecast under different earnings scenario.

This way, you get to have a picture of how your money is going to grow over time.



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