What to do before Investing in UITF

We all have different financial goals and are constantly in search of ways to achieve these.

Whether you’re preparing a nice nest egg for retirement or looking for a way to invest your hard earned money, you must have heard some people mention UITF.

This type of investment is quite popular. However, before making any decision to put in money, it would be beneficial to fully understand what it is.


What is UITF?

UITF stands for Unit Investment Trust Fund. Its name alone already suggests the basics of this investment.

  • It is a fund or a pool of resources.
  • This is a product that is offered by banks to interested inventors.


So, how does it work?

It begins with the bank creating a fund that is divided into units. These can be purchased at an arbitrary initial price.

Let’s use for example a fund with 1 million units sold at 2 pesos each. Any investor like you and me are eligible to purchase the number of units we want.

So if you prefer to purchase 100 units, your initial investment will be 200 pesos. If I then purchase 100 units as well, I would also be investing 200 pesos into the UITF.

We now have 400 pesos invested in the fund. Once all the units are purchased, the total value of the fund will be 2 million pesos.


The Trustee

The bank which sold us our units is known as the “Trustee” or the fund manager.

  • A Trustee does not own the fund but is responsible for managing and investing our fund.
  • The Trustee may do this by buying or selling stocks or bonds or any other assets that fall within the constraints of the fund agreement.

The bank makes money from this product by charging a fee to manage the fund.

The success of the investment of course will depend on how well the trustee manages the fund. So, it is beneficial to choose a reputable financial institution for this purpose.



One term that you will need to know is NAVPU or the Net Asset Value Per Unit.

This is basically the total value of the fund minus the expenses such as trustee fee and taxes divided by the number of units.

So if we continue with our example, say the trustee invested in stocks that went up and the fund is now worth 4 million pesos after fees and taxes. That amount will be divided into 1 million which is the number of units initially sold.

That means our 200 peso investment is now worth 400 pesos.

However, if the investment the trustee chose does not pan out, then the NAVPU can be lower than the initial purchase price.


What to ask yourself before investing in UITF

This may be an investment that has piqued your interest, but before you start shelling out funds, consider asking yourself the following first.

  • What is your investment goal?

There are different types of UITF, so determining your investment goal is a great start to picking the perfect one for you.


  • Are you ready to take the risk?

UITF’s are regulated by the BSP but since these are not deposit accounts, your investment is not insured by the PDIC. If you’re looking for a guaranteed ROI, this may not be the product for you.

UITF’s have higher returns than deposit accounts because there are higher risks involved. Prepare for worst case scenarios where the amount you invested may only be worth half at the time you take it out.


  • How long can you keep your money in UITF?

UITF products usually have investment time horizons that help regulate or manage the risks better. Keeping your money in the fund longer allows it to ride the market fluctuations and have better returns.

So, if you need the money in the near feature, this may not be the appropriate investment for you.


  • Are you confident in the bank you are investing with?

This is probably the most important question you should be asking yourself before doing anything. Your confidence in the financial institution is a factor for you to keep your investment in the fund.

Do an extensive research of the banks and select one that you wholly trust to manage your money.


UITF is a generic term, so each bank may have different names for a similar product.

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