How To Invest In Philippines Top UITF – Peso Lab

Stock fund

The equities fund is primarily invested in the stocks of companies that are on the Philippine Stock exchange. It buys or sells stocks of Jollibee, Aboitiz, Globe, and other publicly-listed corporations. It can be categorized as index fund or equities fund.

Index fund. An index fund is a type of fund that copies the composition of the stock index and its goal is to simply match the latter’s returns. The stock index is the name of the group that is composed of the country’s largest 30 companies, which are also referred to as blue chip companies. Example of this Maynilad, First Gen, BDO, and Metrobank.

Equities fund. Equities fund is a type of fund that is just made up of stocks. Unlike the index fund, its objective can be varied and it can invest in companies that do not belong to the index. One possible goal is to trade stocks in a way that might exceed the returns of the index.

Bond fund

Bond fund trades bonds which are simply debts. These debts are owed by the government or companies that borrow money. In return, the fund collects interest and redeems the full amount once the debt matures. It is considered relatively safe than stocks.

Balanced fund

Balanced fund is a mix of bonds and stocks. These are for moderately aggressive investors who may want to avoid the risks of stocks but also want to get higher return than what can be potentially offered by bonds.

Money market fund

Money market fund is involved in trading securities in the money market, the exchange for banks who want to borrow money from other banks. It is also where government’s short-term debts are bought or sold. It is considered safe and liquid

Benefits of UITF

There are many advantages when investing in UITFs.

• There is no front-end fee or sales load unlike mutual funds.
• One of the benefits is that it’s offered by trust entities and banks, which makes it really easy to open and manage. Here’s a complete list of trust companies offering UITF.
• You only need a small capital to invest. Some can be started for as low as ₱1,000.
• The fund is already diversified in the way it acquires securities from various companies and across industries, which lessen risk.
• When you want to get your money back, the fund is bound to honor it by converting units to cash using NAVPU.
• By investing, you get to earn passive income.
• Setting aside savings in an investment allows you to take advantage of expert fund manager who can maximize your investment.
• It’s convenient to track as banks move toward digitized access. Your online account, such as the one with BPI, makes it possible for you to manage your deposits and investments.

Disadvantages of UITF

What are the risks in investing in UITF?

• According to UITF PH website, investors would not be charged any taxes when redeeming their investment if it’s already been paid for by the trust company.
• Returns vary. There might be capital loss especially in equities.
• Returns are not guaranteed or insured by Philippine Deposit Insurance Corporation.
• Depending on the general market condition, your expectation of gains may not be realized.
• The fund manager decides which companies or bonds to buy, so you have limited control on the actual assets it holds. However, you have the option of the fund that hold the category of securities that you like.
• Units of participation are not stocks (like in mutual funds) so they do not give shareholder rights.

Top 10 Philippine UITF

Here is the best performing UITFs in the country for the year 2019. Data is updated until December 31, 2019. Please take note that this table reports past performance, which does not guarantee or predict future returns. For complete list, see the article on top UITFs. Below is the summary.

• Equity index fund: BPI Philippine Equity Index Fund (5.63%)
• Equities fund: ATRAM Global Technology Feeder Fund (39.09%)
• Balanced fund: Odyssey Diversified Capital Fund (12.66%)
• Bond Fund: UnionBank Long Term Fixed Income Portfolio (22.12%)
• Money Market: UnionBank Peso Short Term Fixed Income Portfolio (6.33%)

The above table shows year-on-year return on investment (ROI) of top UITFs in the country (PESO) as of June 2019.

Best UITF index fund 2019

Best UITF equities funds

Best UITF balanced Funds

Best UITF Bond Funds (top 20)

Best UITF money market funds (top 20)

Qualities of the right UITF for you

There is no one fund that’s suits everyone. That’s because the most appropriate one for you depends on your situation. Here are tips in getting the best UITF.

• Look for a reputable trust entity.
• Research on the level of support they give to their clients. A good customer care goes a long way.
• Check the rates above. Recent performance can be a factor when you are making a decision to invest.
• Remember that past returns do not guarantee future performance. So it’s still pays to research and make comparisons on funds, companies, etc.
• Inquire too on how they update clients on their accounts. Is there an online access? Will an sms, email or mail be sent periodically?
• What is your goal with your investment? Are you saving up for something? Having a purpose helps in determining where to invest. It also prevents you from prematurely closing it.
• How is your financial health? Do you have money for emergency situations?
• How likely are you to need the money that you’ve put into the fund?
• Understand your approach to risk. Are you someone who’s willing to go for more or less risk?

How to invest in UITF

Getting started with UITF is actually easy. It’s like opening an ordinary bank account.

• Choose the trust entity. More than anything else, go for a reputable company with established history, reasonable fees, and good customer service.
• Location is crucial. You may research online on banks or trust entities that offer them and see if they have a branch near you.
• Talk to company reps. Drop by a visit, ask questions, and get to know about the products as much as you can.
• Prepare the required files. Usually, you will be requested to submit a valid identification card, proof of billing, and the minimum initial investment.
• Open the account. You will be asked to fill out forms that would establish your source of income, your risk profile, and other data. Usually, it takes a couple of days for the process, such as issuing units, to be completed.
• Get details on the company’s contact details just in case you might want to get in touch with them in the future.

Optimize your UITF

Once your investment starts rolling, then it’s time to make the most out of your trust fund.

• Start immediately. Don’t spend too much time sitting on the fence. It’s better to have something set aside for savings than none at all.
• Start small. Never think that just because you can only put up the required minimum amount, it’s not worth it.
• Are you investing for your child’s future? An “in-trust-for” or ITF would be a good arrangement. It transfers the account to your kids once they reach the age of 18 years old.
• Reinvest consistently or whenever you can. Adding more each month is a good idea too. In fact, some banks allow auto-debit, so you can enroll a payroll account which gets deducted monthly and automatically goes to your investment.
• Track the the fund periodically. This is where updates from the trust comes in as they can help you keep tabs on what’s going on.
• Continue learning. There might be a new fund with a goal that suits you.

Frequently asked questions about UITF

Below are some of the common questions on the details about investing in trust funds.

• Can I invest in more than one fund? Yes, you can. Different funds can be used for different goals in your life. To make it more convenient for you, it would be better to go with a Philippine trust company that offers several funds. In this way, you can open multiple accounts and manage them relatively more easily.
• Does my UITF mature? No. Trust funds do not mature. They are open-ended. It is really up to you when to start and when to end your investments. There is no schedule when you can purchase or redeem units of participation.
• How do I know the where the fund is invested? You should be given information by the trust company on the goal of the fund as well as the securities it holds. Usually, these securities are bought or sold, so they may change from time to time. Different trust companies have different ways to disseminate information on their portfolio, but do try to check their website.
• How is unit of participation different from shares? UITF’s units of participation simply means that you are part of the fund. It represents your proportionate interest in its total value and you do not have claim to its assets. Shares, in the case of mutual fund, mean that you are part-owner of the company and entitled to the rights of a shareholder such as voting, attending annual shareholder’s meeting, etc.
• At what price can the units be purchased? The price of the units depend on the NAVPU, the net asset value per unit. It is determined by getting the worth of the total fund divided by the units that were issued to all participants.
• When is UITF NAVPU calculated? NAVPU or net asset value per unit of the UITF is calculated at the end of the trading day, which is daily except holidays and weekends. So when you open an account, the the number of units to be issued to you would be the NAVPU that the company declares either on the day you invested or the next trading. Check with the company as they have different rules on which NAVPU to use.
• Are all UITF the same? No, they’re not. They differ based on various factors. Each fund has its own goal, portfolio mix, fees, settlement period, and terms on transactions such as opening an investment, re-investing, or redeeming units.
• How do I redeem units? Go to your trust company or bank. Request that you want to get your money back. There’s usually a bit of a turnaround time, so be ready to wait for a while. Your money may be deposited straight to your account, in cash, or in check.
• How much do I get when the investment is redeemed? Simply multiply the number of units and the NAVPU of the fund which is computed and published at the end of the day. So, say that you have 2,000 units and NAVPU of ₱10. The total is going to be ₱20,000.
• How do I compute my UITF earnings? Multiply the number of units and the difference between NAVPU when you started the investment and NAVPU on redemption. So, that’s (Redeemed NAVPU – Opened NAVPU) x Number of units.

What is an ITF?

An ITF stands for “in trust for.” It’s an arrangement where parents transfer the fund to their kids when they reach the age of maturity.

Are UITF guaranteed?

No, they’re not. They are not deposit accounts. Earnings are not guaranteed. Past data does not guarantee future returs.

Are UITF insured?

No. They’re not deposit accounts. Your investment is not insured with the Philippine Insurance