Investing in UITF or Unit Investment Trust Fund is actually quite easy.
Earning the money you’ll be using already took so much energy so it would be a huge relief to know that investing it is a much easier process.
Step 1 – Choose your Bank
The bank also known as your Trustee will be the one responsible in managing your investment. So it is imperative that you choose one with a successful record with their UITF products.
Do your research before putting money down. There are a lot of resources available on the World Wide Web to help you make the best choice.
Step 2 – Choose your UITF
There are different types of UITF products to choose from depending on the length of time you can keep your money in and your ROI expectations.
- Money Market – This is recommended for moderate investors who can keep their investment in the fund for a minimum of 6 months. If you wish to have a short term, fixed income return then this is the UITF for you.
This is ideal if you’re investing say for a special occasion such as Christmas or a holiday. You get good and modest returns with this type.
- Bond Funds – This is recommended for moderate investors as well who can afford to keep their investment in the fund for a minimum of 3 years. This can be classified as an intermediate fund that can offer a time horizon exceeding 5 years. Investment portfolios for this UITF include bonds and other fixed income securities.
- Balanced Funds – This is recommended for investors who would like a higher return on their investment and who can stay invested for a minimum of 3 years.
- Equity Funds – This is the perfect UITF for you if you would like to invest substantially in equities. This will translate to a better growth of your initial investment. The minimum time horizon for this product is 3 years.
Step 3 – Purchase Units
Once you’ve picked the best UITF product, the next step is to purchase the units. The units have a daily price known as the Net Asset Value per Unit or NAVPU.
Step 4 – Review COP or Certificate of Participation
After you purchase the units, you will be provided with the COP. This will have the details of your investment, such as the NAVPU on the purchase date, the number of units purchased and the amount of participation.
On the back of the COP is a copy of the Trust agreement which is basically the terms and conditions governing your participation.
How Much to Open a UITF Account
One of the questions you are probably asking yourself right now is how much you need to invest in UITF.
This is actually a common question among first time investors.
And the answer is quite simple.
The minimum investment amount depends on the bank and UITF product you choose.
Here is a quick guide to help you out.
There are different UITF products available. To know how much you need to open an account, you will need to pick what type of UITF you want to invest in.
Money Market
This type is perfect for moderate investors who can stay invested for a minimum of 6 months. The portfolio includes short term income deposits and securities.
The minimum amount required for this type varies depending on the bank you choose.
- BDO Money Market Fund
BDO offers a money market fund product with a Php100,000 minimum investment and minimum additional amount.
The management or trust fee though is only a .50% per year. They do not charge an early redemption fee nor does it have a minimum holding period.
- BPI Money Market Fund
BPI has a money market fund product with a lower minimum investment.
This bank only requires a Php50,000 initial amount with Php10,000 for additional investment.
BPI charges a .75% trust fee.
If you wish to redeem your investment early, there is a fee which is .25% of your original investment. The minimum holding period is 7 days.
- Metrobank Money Market Fund
One other bank that offers a money market UITF is Metrobank.
The minimum investment required is Php50,000.
If you wish to add to the initial amount, the minimum requirement is Php25,000.
Metrobank has a 1.00% trust fee.
To do an early redemption of your investment, the back will charge a fee which is 50% of income.
Equity Funds
This type of UITF is designed for investors who prefer a more aggressive approach.
The portfolio includes a substantial investment in equities for a higher long-term appreciation of growth of capital.
The three banks mentioned above also offer this type of UITF.
See below for details.
| BDO | BPI | Metrobank | |
| Minimum Investment | 10,000 pesos | 50,000 pesos | 25,000 pesos |
| Minimum Additional | 10,000 pesos | 10,000 pesos | 25,000 pesos |
| Management/Trust Fee | 1.00% per year | 1.50% per year | 2.00% per year |
| Early Redemption Fee | 1.00% of original investment | 0.50% of original investment | 50% of income |
| Minimum Holding Period | 30 days | 90 days | 90 days |
Note: Please inquire directly at the bank for more accurate and updated info.