Unit Investment Trust Funds (UITF) Benefits (2024)
Benefits to Investors
Our wide selection of BDO UITFs allows you to choose a fund or a combination of funds that is/are well suited to your needs, financial requirements and life goals. With the BDO UITFs, your common investing concerns are addressed.
Diversification. By investing in a UITFs, risks are spread out across the various investments held by the pooled trust fund.
Liquidity. While we generally recommend that you stick to your investment time horizon and stay invested in the UITFs for a longer period of time, UITFs are designed to allow you to can redeem units of participation at any time.
Affordability. UITFs generally require a much lower minimum investment amount compared to other investment alternatives.
Better earnings potential. Greater earnings potential is achieved without having to invest large sums of money. There are opportunities for potentially higher returns due to possible marked-to-market gains on top of accrued income from investments. UITFs provide access to financial instruments not readily available to retail investors.
Exempt from reserve requirements. UITFs are not subject to reserve requirements imposed on bank deposits. Thus, your funds earning potentials are maximized.
Professional fund management. Participating in the UITFs allows you to gain access to the expertise and services of seasoned fund managers who are able to actively monitor the markets for possible investment opportunities and managed the risks for you.
Transparency. Trust entities are required to publish the UITF price at least weekly, allowing investors to compare investment performance of various fund managers.
Regulated product. The management and administration of UITFs by Trust entities are governed by the Bangko Sentral ng Pilipinas (BSP). Thus, aside from the yearly triple audit conducted to BDO Trust, each of its UITF is subject to a separate annual audit by an independent auditor that is acceptable to the BSP. The results of such audit may be made available upon your request. In addition, each UITF is required to have a BSP accredited third party custodian, who is tasked with safekeeping the securities of the UITF and performing independent marking-to-market of such securities. All these safeguards redound to the protection of the UITF investors.
Unit Investment Trusts (UITs) have several specific investment advantages. UITs provide investors with access to a diversified portfolio of securities; this can help to reduce the risk of losses due to any single security's underperformance.
Unit Investment Trusts (UITs) have several specific investment advantages. UITs provide investors with access to a diversified portfolio of securities; this can help to reduce the risk of losses due to any single security's underperformance.
By investing in a UITF, you can grow your money grow through diversified products and markets. And since investment objectives differ from one UITF product to another, the benefits, charges, risks, and other rules governing your investment may affect your investment journey.
A unit investment trust (UIT) is a registered investment company that buys and holds a generally fixed portfolio of stocks, bonds, or other securities. “Units” in the trust are sold to investors (unitholders) who receive a share of principal and dividends (or interest).
Transparency—Know What You Own. UITs are fixed portfolios that allow investors to know what securities are held in the trust from the date of deposit until maturity. Enables investors to make informed decisions that consider their specific risk preferences. May help avoid concentrated positions and portfolio overlap.
Clients considering investing in UITFs must have investible funds that can be invested in them for a reasonable time to maximize earnings potentials. It means that clients can invest (place) or withdraw (redeem) their investments at any time; subject to guidelines outlined in the UITF Declaration of Trust.
Returns may vary and are not guaranteed. There might be risks for capital loss in equity. The Philippine Deposit Insurance Corporation may not insure it. Your expectation for gains may depend on the condition of the general market.
Fees. Not only will you pay for trust units, but you must also pay fees for running the trust. These fees include: ...
Tax. If trust assets are sold at a loss that loss usually stays within the trust. You cannot offset asset losses against other streams of taxable income.
Unit trusts usually invest in equity shares on stock exchanges. These stocks are inherently known for being higher risk investments due to the fact that they are very sensitive to any sort of news that can potentially affect the companies that the shares are held in.
Let's assume that you are investing for retirement, a UITF is a good vehicle to help you build up your retirement funds because the long-term nature of your need will allow you to weather the fluctuations in your funds.
Mutual fund shares are more available to as many people as possible who are willing to take part in the pooling unlike, UITFs whose units are fixed and can only be exchanged between their current investors.
Like all types of investments, UITFs have some amount of risk. Earnings from UITFs are not a hundred percent guaranteed and there is a possibility that your investment can result in a loss. UITFs offer investors a great opportunity to earn higher potential returns.
Introduction: My name is Saturnina Altenwerth DVM, I am a witty, perfect, combative, beautiful, determined, fancy, determined person who loves writing and wants to share my knowledge and understanding with you.
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