Thursday, October 18, 2012

Unit Investment Trust Fund - What Is It?


Unit Investment Trust Fund is an open-ended trust fund which consists of collective investments of numerous investors which are pooled together with the intention of achieving a certain investment objective. It is offered by banks and managed by the bank’s fund managers.

Unit investment trust funds were introduced in the Philippines initially as Common Trust Fund (CTF). This commenced in 2003 when banks and investment houses were authorized to conduct trust businesses in the Philippines.

However, with the implementation of BSP Circular No. 447 Series of 2004, CTFs were phased out. Following the BSP guidelines, banks and other trusts institutions converted their existing CTFs into UITFs while others launched new UITFs. At present, there are numerous kinds of UITFs being offered by banks and other financial institutions in the trust market.

UITF were classified according to the following fund classifications by The Trust Officers Association of the Philippines (TOAP). TOAP is an organization of trust managers in the Philippines.

    1.  Equity Fund
    2.  Balanced Fund
    3. Fixed Income Funds
    4. Index Funds

Fixed–income fund has 4 variants classified through the Macaulay duration. These are the Money Market Fund, Intermediate-term Bond Fund, Medium Term Bond Fund and Long-term Bond Fund.



EQUITY FUND

Equity Funds are securities invested mostly in equities or stock investments with a small portion invested in fixed income or short term deposits. Potential earnings from this fund profits from higher returns due to capital appreciation and dividends.

Among the list of UITF Equity Funds offered by banks are as follows:

    1.   BPI Equity Value Fund (formerly BPI Equity Fund)
    2.  BPI Global Equity Fund
    3.  BPI-ING Odyssey Philippine High Conviction Equity Fund
    4. BPI-ING Odyssey Philippine Equity Fund
    5. BPI-ING Tax Exempt Philippine Equity Fund
    6.  Banco de Oro Equity Fund
    7. Metrobank Metro Equity Fund
    8. PNB Enhanced Philippine Index Reference Fund
    9. PNB High Dividend Fund
    10. RCBC Rizal Equity Fund
    11. Security Bank Peso Equity Fund
    12. Union Bank Large Cap Equity
    13. Allied Unit Performance Equities Fund
    14. UCPD United Equity Fund
    15.  AB Capital Equity Fund
    16. PBComm Value Equity Fund


BALANCED FUNDS

Balanced Funds aims to achieve medium to long term capital growth by investing in a mixed portfolio of stock securities and fixed-income funds. Balanced funds were intended for investors who are looking for a blend of safety and moderate capital appreciation.

List of UITF Balanced Fund offered by banks:

    1. BPI Balanced Fund
    2. BPI-ING Odyssey Diversified Capital Fund
    3. BPI-ING Odyssey Diversified Balanced Fund
    4. BDO Peso Balanced Fund
    5. Chinabank Balanced Fund
    6. Metrobank Metro Balanced Fund
    7. PNB Mabuhay Prestige
    8. RCBC Rizal Balanced Fund
    9. Security Bank Peso Asset Variety Fund
    10. Unionbank Peso Balanced Portfolio
    11. UCPB United Balanced Fund
    12.  Landbank of the Phils. Growth Fund
    13.  DBP Gintong Sikap Secure Fund
    14. PBComm Best Balanced Fund
    15. RSB Balanced Fund

  

FIXED-INCOME FUNDS

Fixed-income funds are funds that invest primarily on fixed income investments such as bonds or certificate of deposits.

The Trust Officers Association of the Philippines (TOAP) classified Fixed – Income UITFs according to the following variants:


MONEY MARKET FUND


Money Market Funds are invested primarily in fixed–income securities and have duration of less than a year. These are suitable for risk hesitant investors who are looking for safe and liquid investments.

The returns on these funds are usually higher than the returns on savings accounts or time deposits.


List of UITF Money Market Funds:

    1. BPI Short-Term Fund
    2. BPI-ING Odyssey Peso Cash Management Fund
    3. BDO Peso Money Market Fund
    4. Chinabank Money Market Fund
    5.  Metrobank Metro Money Market Fund
    6.  PNB Mabuhay Prime
    7. PNB Global Filipino Fund – Peso Fund
    8. RCBC Rizal Peso Money Market Fund
    9. RCBC Savings Bank Molave Fund
    10. Security Bank Secure Peso Fund
    11. Security Bank Peso Ease Fund
    12. UCPB United Cash Management Fund
    13. UBP Peso Money Market Porfolio
    14. PBComm Signature Trust Fund
    15. East West Bank Infinity Peso Money Market Fund
    16. Sterling Bank of Asia Money Market Fund

BOND FUNDS

Bond Funds are invested primarily in bonds and may include government, corporate and municipal bonds. The objective of this kind of fund is capital appreciation and higher yields. This type of fund is suitable for risk tolerant investors who have a longer investment time horizon.

Bond Funds have 3 variants, the Intermediate Term Bond, the Medium Term Bond and the Long Term Bond Funds.


Lists of Intermediate-term Bond Funds (duration of up to a maximum 3 years)

    1.  BPI Premium Bond Fund
    2.  BPI Institutional Fund
    3.  BDO Peso Bond Fund
    4.  Metrobank Max-3 Bond Fund
    5.  Metrobank  Metro Invest Plus
    6. PNB Mabuhay Plus
    7. PNB Dream Builder
    8.  East West Bank  Peso Maximizer
    9. UBP Current Income Portfolio
    10. UBP Infinity Prime Fund.


List of Medium Term Bond Funds (duration of up to 5 years)


    1.  BPI-ING Odyssey Peso Income Fund
    2.  BDO Fixed Income Fund
    3. BDO GS Fund
    4. Metrobank Metro Max-5 Bond Fund
    5. Chinabank GS Fund
    6.  Allied Bank Unit Performance GS Fund
    7. UBP Philippine Peso Bond Portfolio
    8. Robinsons Bank Blue Peso Fixed Income Fund
    9. Philippine Business Bank Diamond Fund


List of Long Term Bond Funds (duration of above 5 years)

    1. BPI-ING Odyssey Peso Bond Fund
    2. BPI-ING Odyssey Tax-Exempt Peso Fixed-income Fund
    3. RCBC Rizal Peso Bond Fund
    4. UCPB United Conservative Fund
    5. Landbank GS-FI Fund
    6. UBP Long Term Current Income Portfolio
    7. East-West Bank Infinity Peso Long-Term Bond Fund
    8. Bank of Commerce Peso Trust Fund



INDEX FUND

Index Fund portfolio could be composed of equity securities or fixed-income funds. It aims to benchmark the performance of existing equity or other specific indices.


List of UITF Index Fund
    1. ABF Philippines Bond Index Fund

Please note that Unit Investment Trust Funds are not covered by PDIC since it is not a bank deposit product.

Yields in UITF investments cannot be guaranteed. Therefore, the units held by the investor, when redeemed maybe worth higher or less compared to his initial investments.

To manage risks in your investments, I recommend for you to increase your knowledge and know-how by reading books, publications and online information about investing.

In behalf of our readers, we at Piso Ni Juan will try much of our best to impart with you all the information that you need for you to succeed in your investments!

Heads up to your financial success, Juan!