How to Invest in UITFs

This part of Your Ultimate Guide to Investing for Beginners. To read all posts in order, start with What is Investing? then continue reading the rest of the series on this page.

Investing on your own is admittedly not easy to do. Thankfully, there are options for investors that allow you to invest even with just P1,000. Besides affordability, pooled investments give you the benefit of having a professional finance manager to manage the fund. Because they are liquid, have the advantage of being able to withdraw your funds when the need arises, subject to fees in some cases.

What are Unit Investment Trust Funds?

Unit Investment Trust Funds or UITFs are pooled funds just like Mutual Funds. Similar to mutual funds, UITFs are good for those who does not have the time and patience to study and monitor their investments in a daily basis. It is managed by professional fund managers (trustees), who invest it in different financial instruments depending on the type of UITF you’ve invested in.

UITFs are offered mostly by commercial banks and is regulated by Bangko Sentral ng Pilipinas (BSP). The value of a unit of the UITFs, called the Net Asset Per Value Per Unit (NAVPU), is computed daily by dividing the Net Asset Value of the Fund (Total Assets less Total Liabilities) by the total number of outstanding units of participation in the Fund.

Click here for a List of Banks who offer UITFs in Pesos (PHP)

Click here for a List of Banks who offer UITFs in Dollars (USD)

UITFs seem to be similar with Mutual Funds in the sense that they are both pooled funds. How are they different?

I will discuss these differences in another post. Please see this link: Differences between UITFs and Mutual Funds

How do You Earn from UITFs?

If the NAVPU increases in value, you can sell your shares of the fund for a profit. Likewise, if the NAVPU depreciates, you may incur a loss if you sell.

Are there Different Types of UITFs that I Can Choose from?

Money Market Funds–primarily invested on short-term securities
Bond Funds–primarily invested in fixed-income securities
Balanced Funds–invested in both stocks and fixed-income securities
Equity Funds–primarily invested in stocks

How do I Invest in UITFs?

Once you’ve decided to invest in Unit Investment Trust Funds, you can just go to a bank near you and ask if they offer UITFs. You will then be asked to fill up some forms and answer a risk assessment questionnaire. Know the minimum initial investment of that UITF you inquired on and then you can start investing if you already have the money.

Buying and withdrawing units is easy. You can make arrangements with the bank so that funds are automatically deducted from your savings account and invested into the UITFs. If you decide to redeem the units, you can request for a withdrawal and the funds will be credited to your bank account.

What are the Costs in Investing in UITFs?

The trustee shall charge the fund for management fees, taxes and qualified expenses. The management fee shall differ for each type of fund and will cover the costs of investment research, management, marketing and routine administrative expenses of the trustee.

Related Post: How to Invest in Mutual Funds

Related Post: Where Can I Invest my Money?

Note: Before investing, remember that none of the returns are guaranteed, so have an emergency fund first so that you’re covered if the worst does happen to your investments. When choosing your investment portfolio, go with the one that most matches your risk appetite, time horizon and your financial goals.