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Friday, June 3, 2011

What is Unit Investment Trust Fund or UITF?

What is Unit Investment Trust Fund or UITF? 

Unit Investment Trust Fund or UITF
Many people are asking me, where can I invest my extra money to grow more? They really want to invest some of their saved money but they didn’t know where and how to put it to grow more due to lack of knowledge about various investment instrument schemes available today.

As a result, they fall to scams and fraud because of the lure and promises of high returns in the shortest time possible. Looking and knowing of Filipino mindset, we want quick cash, instant millionaire or win and hit the Lotto jackpot.

In reality, there are many legitimate investment instrument that individual can park their money without falling and become a victim of scams. I don’t know why there’s little information campaign about these investment schemes. 

But I believe that if many Filipino know these investments, it will greatly help to improved our economy. The more investments, the better the economy will be. One good investment instrument option you can used and park your money to grow is by investing in Unit Investment Trust Funds (UITF) offered by our local banks.

What is Unit Investment Trust Funds (UITF)?
Do you know that your banks offer this? Unit Investment Trust Fund or UITF is an open-ended pooled trust fund from individual investors. UITF is managed by a professional fund managers who invest the fund in various investment schemes like government securities, bonds, stocks or commodities depending on your risk appetite. 

Are you a risk taker or risk averse person? Try to consider these “the greater the risk, the greater the return” in determining your risk appetite. Read this basic investing concepts as additional info for investing.

An open-ended pooled fund is a type of fund where an investor can invest or redeem his/her investment any time he wants subject to the Declaration of Trust’s agreement.

The investing mechanics, operations and managements of a UTIF is contained in a Declaration of Trust's agreement. It is the governing document where you can know who are the fund managers, where is the UITF invested, how much is the past and current price of the UITF, and a lot more.
Where Can I Buy UITF?
Typically, UITF is managed and sold by most of the big banks in the country like BPI, BDO, Metrobank, RCBC and other commercial and universal banks. In order to buy a UITF, you should visit your bank and there are some forms requirements you need to fill up and submit before you can actually invest in it. 

How to Buy UITF?
If you want to buy UITF, it is advisable to open own savings account in any bank you choose. After having a bank account, you can link it to your UITF account so that it will be easy for you to transfer, add or buy more Funds in the future. BPI and other big banks have this feature and also you can access your account online for more convenient.

How Much is the Minimum Investment in UITF?
It is dependent on the classification of UITF but normally, the minimum FIRST investment you can put in UITF is Php 10,000 and Php 1,000 for succeeding or additional investment you will make. You can read this Unit Investment Trust Fund offered by banks in the Philippines or visit the website of your bank to know more.

Is UITF Insured?
Since UITF is not a deposit product and services even if it is offered by banks therefore it is not insured and covered by Philippine Deposit Insurance Corporation (PDIC). 

However, there is proposal now in congress stating that investment also must has an insurance. Read this Insurance funds for stock and bonds proposed for more information.
Is there a Guaranteed Returns in Investing in UITF?
No. Any investment instrument cannot guarantees a positive return because of many risk factors involved. You should read and understand first the risk disclosure agreement of the UITF before venturing and making any investment.

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