How Much Do You Need to Invest in UITF?



In my post "A Primer on UITF", I have mentioned that UITF or Unit Invest Trust Fund which is offered by several bank in the Philippines is a good alternative to mutual funds. Also UITF is a good way to invest indirectly into various stocks, bonds and other securities at a small capital. Since the money is pooled and invested strategically in various instruments, your invesment will have sufficient diversification advantage like lower risk and higher potential return.

Investment is a must to reach your financial goal.
Below is the table summary of selected UITF offered by various banking institution in the Philippines. This table covers only the 3 main types of UITF namely: Equity UITF, Balanced UITF and Bond UITF. Money Market UITF was excluded since it is a short term investment and considered inferior in giving returns in the long run since its normal average gain is below the inflation rate. For the definition of each type of UITF, please refer to the post "Kinds of Mutual Fund in the Philippines", since both UITF and mutual fund types are very similar.

Note that the Return of Investment mentioned in the table is based on the NAVPU as of May 25, 2011.

One advantage of UITF over mutual fund is it doesn't have any Sales load or Exit Fee. Also, the fees mentioned above (Management and Other fee) is included in daily NAVPU calculation. Custodian fee may vary depending on the institution but are usually very small (less than 0.5%). Take note that the same with mutual fund, it requires early redemption fee (ranging from 0.5-2%) if the investment is pulled out prior to the end of the prescribed holding period. Fortunately, most UITF have shorter holding period compared to mutual funds so we can count it as another advantage of UITF against mutual fund though this doesn't matter if you are long-term investor.

If you are in a tight budget, BPI UITFs (BPI Equity Fund, BPI Balanced Fund and BPI Premium Bond Fund) is the best option since it requires both the lowest initial investment of P10,000 and lowest min transaction of P1,000 (additional or redemption).

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