HI Guys,
It's 3am in the Philipines. But my Day (night rather!) will not end without sharing my thoughts in investing in UITFs
For those who don't have an idea what a UITF is, let's take this definition:
A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in pesos or any acceptable currency, which is operated and administered by a trust entity and made available by participation. ... Most UITFs are considered medium to long term investments.
From the definition above, we can see three things:
- Pooled Trust Fund - Meaning this is a collection of money from different investors
- Operated by a Trust Entity - The day to day management activities of your investment are being performed by someone elsa (in this case the bank and it's fund managers)
- Long to medium term investment - I generally consider them 'medium' investments since they are somewhat in between. This means UITF's can give better returns than savings and deposits in banks but gives generally modest returns compared to pure Equity/Stocks, Forex and Cryptocurrency investments.
So how did i start?
Generally it's very simple to open an account since UITF's in the Philipppines are virtually offered in every bank in the country. But i prefer to open on one of the most popular ones of course.
BPI Asset Management Corporation is the one who manages UITF's for BPI.
Essentially to open an account i just went to the branch and talked to the bank personnel that i want to open and account. After that they will give you the forms to fill up and will let you answer a test that will asses your "risk appetite". This is standard procedure of the bank in order to suit your investment needs.
Process usually takes days (around 3-5 working days). After that your investment account should now reflect on your BPIExpressonline account. With this, you can now choose to start your own UITF investment.
How much does it cost?
Usually investments start at 10,000 PHP. Moving forward, you can add additional investments in increments of 1,000 PHP
You may ask, WHY DO I STILL INVEST IN UITF EVEN IF I ALREADY HAVE OTHER INVESTMENTS? (e.g. Stocks, Crytos, Bonds etc.)
Well i'm a believer of diversification, as Warren Buffet said "don't put your eggs in one basket" the thing that i liked about UITF's is that it somehow gave me an exposure to a wide range of investments even with the limited sources that i have. (Well you cannot buy all the companeis in PSE but you can get the majority of them if you invested in a UITF that is leaned to an Equity Fund.) isn't that nice?!
IF UITFs is so good, does it mean it does not have its drawbacks?
As every other investment/s out there it has it's CONs as well, some of the notable ones are:
*First and foremost i already said that this investment type is 'something in between'. Gains are good but not as good as high risk/ high reward investments out there but at the same time they are not as lousy as bank deposits.
*Since they are managed by fund managers, you need to pay additional fees. :) and at the same time the performance of the fund depends on them (although they are experts, they make mistakes sometimes)
Final Words:
Well there you have it, i hope you got to have an idea or glimpse of what UITF's are and what can it do to boost your investments. AS you can see i only intend to make this article short in order for us to get a high level understanding of this one. If you have any questions fee free to comment below and ill answer them right away. I intend this to make this more interactive so that we can learn together.
HOPING FOR YOUR FINANCIAL SUCCESS,
WIL
FULL DISCLOSURE:
Currently i have BPI as my sole holder of my UITFs
I have 3 funds with them.
BPI Premium Bond Fund - My Bond exposure actually, if you want to know more about bonds, you can check here https://steemit.com/philippines/@willinvestph/philippine-bond-investing-the-basics
BPI High Dividend Equity Fund - My UITF version of my Dividend Strategy, if you want to know how i invest in PSE dividend stocks, you may check it here https://steemit.com/philippines/@willinvestph/philippine-stock-market-series-may-17-2018-bonus-article-my-dividend-investing-strategy-in-the-pse
BPI Balanced Fund - Something in between fund of mine, Combination of items one and two above!
Sources:
http://www.uitf.com.ph/faqs.php
http://richardmacalintal.com/unit-investment-trust-fund-uitf/
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DISCLAIMER: These articles are for educational and informational purposes only and do not constitute to any advice to buy or sell investments. To each is his/her own decision if they will do the recommendations stated here