Author Topic: Ano ba difference ng UITF sa Mutual Funds? Meron ba?  (Read 640 times)

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NeoGemini

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Ano ba difference ng UITF sa Mutual Funds? Meron ba?
« on: January 16, 2016, 06:55:00 PM »
Ano ba difference ng UITF sa Mutual Funds? Meron ba?

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Ano ba difference ng UITF sa Mutual Funds? Meron ba?
« on: January 16, 2016, 06:55:00 PM »

Mountain View

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Re: Ano ba difference ng UITF sa Mutual Funds? Meron ba?
« Reply #1 on: April 17, 2017, 01:26:07 PM »
Mutual Fund vs. UITF: Which Is Better Investment?

I have read so many articles regarding what is better investment between a Mutual Fund and a Unit Investment Trust Fund. Oftentimes, I see some prejudice on their perspective which more often misleads a potential investor because of misconception.

An insurance agent will, of course, tell that the best investment is Variable Universal Life Insurance (VUL) which they may say, meets both insurance and investments needs of the investor. A mutual fund agent will, likewise, offer the different mutual fund investment trusts his company offers.

A bank seldom offer the UITF trusts products because, honestly speaking, most of the bank employees in the branch were not well informed regarding their UITF trust products. Take it through my own experiences.

During my earlier years getting into the bandwagon of investing, I am cautious enough to get as much information regarding an investment product before I dive into it.

Before I bought my first share of stocks, I read tons of books just to get as much knowledge I can possibly get regarding stocks trading, the technical and fundamental analysis methods and even follow some blogs for tips and valuable advices (my favorite is www.tsupitero.com by Miko Sayo).

I got into swing trading spending much of my time calculating company fundamentals and analyzing technical trends but later on, I realized that it is not the way I want it to be. I am not a trader, I am an investor.

There is a big difference, if you don’t realize it yet, between a trader and an investor. I choose to follow the latter and I start investing in good stocks with sound financial fundamentals and watch it grow over time, while I enjoy the price per share growth as well as regular dividends.

I got interest into mutual fund investing when one of my best friends got his and informed me about the financial rewards he is getting from his mutual fund investments.

My awareness about UITF investment happened when my wife complained about our savings account which is not growing in the bank. I inquired with our bank’s trusts officer about investment alternatives which, unfortunately she answered unsatisfactorily. I conducted my own research and calculations and after choosing the right UITF product, we got our first UITF investment added in our investment portfolio.

Presently, a greater portion of our portfolio is UITF investments in which reasons; I will be sharing to you in this post.

 
Mutual Fund VS Unit Investment Trust Fund


This insight is based on my experiences as an investor, not a broker, a banker nor an insurance agent who does a living selling these kinds of products. I am an engineer and an investor who would love to get the best returns from my investments.

As I discussed on my previous posts about Mutual Funds and Unit Investment Trust Funds, there are no major differences between the two except that Mutual Funds were offered by mostly insurance and other investment companies (few banks have this, too) and is regulated by SEC while UITFs were offered by banking institutions and is regulated by the BSP.  Your unit of ownership for Mutual Funds is called Net Asset Value per Share while for UITF, it is called Net Asset Value per Unit.

Let’s take on several factors that will determine the key differences for your decision of choosing between the two of this.


      1.       Initial Charges

When you buy shares of a certain Mutual Fund, a so-called Sales Load or Charge will be deducted from your investment amount during the initial purchase thereby, as a result lowers the size of your investment. A sales load is a commission or sales charge awarded to the sales agent of the mutual fund.

Example:

I am planning to invest P100,000.00 in an Equity Fund offered by ABC Assurance Company with a prevailing NAVPS of 1.25. A front-end sales load of 4% is required at the time of initial purchase (exclusive of Value Added Tax). How much number of shares do I expect?

Computation:

P100,000.00 less 4% Sales Load equals P96,000.00

Total shares purchased equals P96,000.00 divided by 1.25 NAVPS of the day
Total shares purchased equals 76,000 shares.


Please do note that aside from the Sales Load, most mutual fund companies charges exit fees when you redeem your mutual fund investments.

Banks, on the other hand, don't charge sales load as well as exit fees. Just take note about the UITF's Minimum Holding Period so that you will avoid not be charge with an ample amount in case you wanted to pull-out your investments within the minimum holding period I mentioned.

Example:

I am planning to invest P100,000.00 in an Equity Fund offered by XYZ Bank with a prevailing NAVPU of 1.25. How much units will I be able to buy out of this capital?

Computation:

P100,000 divided by 1.25 NAVPU of the day.
Totals units bought equals 80,000 units.


      2.      Accessibility

Due to numerous branches a bank has, investing with the bank’s UITF products is accessible. Major Banks operates mostly on major locations. Therefore, it is more advantageous to do business with the bank since you won't be going away near your comfort location.

Most mutual fund companies require submitting your documents (Investment Application Form, Account Opening Form, Signed Signature Cards, IDs, etc.) in their head office or main branch where you need to travel out of your way just to place your mutual fund investments.


      3.       Simplicity

Your bank account with the bank is link with your UITF investment account as your settlement account. Putting additional investment funds or doing redemption is very easy since you are dealing with the same bank. You can also perform this activities online if your account is enrolled with the banks online facilities.

Most mutual fund companies don't enjoy this privilege since they are separate company or entity from the bank.


     4.      Online Performance Tracking

Monitoring your funds’ performance is easier for UITF since the funds Daily NAVPU is posted on a daily basis with the bank’s website. Most banks website, also, has an online investment returns calculator to compute your gain (or loss) anytime you wanted to know your investment’s performance.

Although a few mutual fund companies have this feature in their websites, most informations are not  up-to-date or their URLs are hard to find unlike bank's websites which are very easy to find and navigate.


I have read so many articles regarding what is better investment between a Mutual Fund and a Unit Investment Trust Fund. Oftentimes, I see some prejudice on their perspective which more often misleads a potential investor because of misconception.

An insurance agent will, of course, tell that the best investment is Variable Universal Life Insurance (VUL) which they may say, meets both insurance and investments needs of the investor. A mutual fund agent will, likewise, offer the different mutual fund investment trusts his company offers.

A bank seldom offer the UITF trusts products because, honestly speaking, most of the bank employees in the branch were not well informed regarding their UITF trust products. Take it through my own experiences.

During my earlier years getting into the bandwagon of investing, I am cautious enough to get as much information regarding an investment product before I dive into it.

Before I bought my first share of stocks, I read tons of books just to get as much knowledge I can possibly get regarding stocks trading, the technical and fundamental analysis methods and even follow some blogs for tips and valuable advices (my favorite is www.tsupitero.com by Miko Sayo).

I got into swing trading spending much of my time calculating company fundamentals and analyzing technical trends but later on, I realized that it is not the way I want it to be. I am not a trader, I am an investor.

There is a big difference, if you don’t realize it yet, between a trader and an investor. I choose to follow the latter and I start investing in good stocks with sound financial fundamentals and watch it grow over time, while I enjoy the price per share growth as well as regular dividends.

I got interest into mutual fund investing when one of my best friends got his and informed me about the financial rewards he is getting from his mutual fund investments.

My awareness about UITF investment happened when my wife complained about our savings account which is not growing in the bank. I inquired with our bank’s trusts officer about investment alternatives which, unfortunately she answered unsatisfactorily. I conducted my own research and calculations and after choosing the right UITF product, we got our first UITF investment added in our investment portfolio.

Presently, a greater portion of our portfolio is UITF investments in which reasons; I will be sharing to you in this post.

 
Mutual Fund VS Unit Investment Trust Fund


This insight is based on my experiences as an investor, not a broker, a banker nor an insurance agent who does a living selling these kinds of products. I am an engineer and an investor who would love to get the best returns from my investments.

As I discussed on my previous posts about Mutual Funds and Unit Investment Trust Funds, there are no major differences between the two except that Mutual Funds were offered by mostly insurance and other investment companies (few banks have this, too) and is regulated by SEC while UITFs were offered by banking institutions and is regulated by the BSP.  Your unit of ownership for Mutual Funds is called Net Asset Value per Share while for UITF, it is called Net Asset Value per Unit.

Let’s take on several factors that will determine the key differences for your decision of choosing between the two of this.


      1.       Initial Charges

When you buy shares of a certain Mutual Fund, a so-called Sales Load or Charge will be deducted from your investment amount during the initial purchase thereby, as a result lowers the size of your investment. A sales load is a commission or sales charge awarded to the sales agent of the mutual fund.

Example:

I am planning to invest P100,000.00 in an Equity Fund offered by ABC Assurance Company with a prevailing NAVPS of 1.25. A front-end sales load of 4% is required at the time of initial purchase (exclusive of Value Added Tax). How much number of shares do I expect?

Computation:

P100,000.00 less 4% Sales Load equals P96,000.00

Total shares purchased equals P96,000.00 divided by 1.25 NAVPS of the day
Total shares purchased equals 76,000 shares.


Please do note that aside from the Sales Load, most mutual fund companies charges exit fees when you redeem your mutual fund investments.

Banks, on the other hand, don't charge sales load as well as exit fees. Just take note about the UITF's Minimum Holding Period so that you will avoid not be charge with an ample amount in case you wanted to pull-out your investments within the minimum holding period I mentioned.

Example:

I am planning to invest P100,000.00 in an Equity Fund offered by XYZ Bank with a prevailing NAVPU of 1.25. How much units will I be able to buy out of this capital?

Computation:

P100,000 divided by 1.25 NAVPU of the day.
Totals units bought equals 80,000 units.


      2.      Accessibility

Due to numerous branches a bank has, investing with the bank’s UITF products is accessible. Major Banks operates mostly on major locations. Therefore, it is more advantageous to do business with the bank since you won't be going away near your comfort location.

Most mutual fund companies require submitting your documents (Investment Application Form, Account Opening Form, Signed Signature Cards, IDs, etc.) in their head office or main branch where you need to travel out of your way just to place your mutual fund investments.


      3.       Simplicity

Your bank account with the bank is link with your UITF investment account as your settlement account. Putting additional investment funds or doing redemption is very easy since you are dealing with the same bank. You can also perform this activities online if your account is enrolled with the banks online facilities.

Most mutual fund companies don't enjoy this privilege since they are separate company or entity from the bank.


     4.      Online Performance Tracking

Monitoring your funds’ performance is easier for UITF since the funds Daily NAVPU is posted on a daily basis with the bank’s website. Most banks website, also, has an online investment returns calculator to compute your gain (or loss) anytime you wanted to know your investment’s performance.

Although a few mutual fund companies have this feature in their websites, most informations are not  up-to-date or their URLs are hard to find unlike bank's websites which are very easy to find and navigate.

PesoRepublic.com | Your smart guide to money matters and entrepreneurship.

Re: Ano ba difference ng UITF sa Mutual Funds? Meron ba?
« Reply #1 on: April 17, 2017, 01:26:07 PM »

 

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