Unit Investment Trust Fund

Investing in Unit Investment Trust Funds (UITF) is a great way to build wealth. The potential returns in this investment vary depending on the risk that we are willing to take. The UITF is similar to a mutual fund and is managed by the trust divisions of banks. UITF is a more recent instrument established in 2004 and regulated by the Bangko Sentral ng Pilipinas (BSP). All options of mutual fund are available for UITF too.

A 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. Each UITF product is governed by a Declaration of Trust (or Plan Rules) which contains the investment objectives of the UITF, as well as the mechanics for investing, operating and administering the fund.

Most UITFs are considered medium to long term investments. Clients considering to invest in UITFs must have the financial resources to stay invested in them for a reasonable period of time in order to maximize earnings potentials. If the funds to be invested will be needed by the client in the immediate future, the UITFs may not be a suitable investment vehicle for such client.

An open-ended trust fund allows clients to invest or redeem their investments at any time subject to guidelines set forth in the UITF Declaration of Trust. Funds from various clients with similar investment objectives are pooled together into one fund, which the trustee invests in various types of securities with the aim of maximizing returns within reasonable risk levels. 

Units of participation are made available to investors based on the Net Asset Value Per Unit (NAVPU) of the fund for the day. The NAVPU is derived by dividing the fund’s Net Asset Value (NAV) by the number of outstanding units in the fund. NAV, on the other hand, is the sum of the market value of the investments of the fund less expenses such as taxes, fees and other qualified charges. To determine how many units of participation a certain amount of investment is equivalent to, simply divide the amount to be invested by the prevailing NAVPU for the day.

UITFs are established and managed based on a set of investment objectives and strategies, and these have varying levels of risks and returns. UITFs may be denominated in Philippine Pesos, US Dollars and acceptable third currencies. Following are the four general major classifications of UITFs listed according to ascending levels of risk, return and investment time horizon:

a.    Money Market Funds - These funds are invested principally in short term, fixed income deposits and securities with a portfolio duration of one year or less.

b.    Bond Funds - The mandate of these funds is to invest in a portfolio of bonds and other similar fixed income securities with portfolio duration which may exceed one year.  

c.    Balanced Funds - The mandate of these funds is to invest in a diversified portfolio of bonds and stocks where investments in stocks shall be up to a maximum of 40% to 60% of the fund, with the balance invested in fixed income securities.

d.    Equity Funds - The mandate of these funds is to invest substantially in equities. Cash may be kept for liquidity and portfolio re-balancing purposes. 

The trustee shall charge the fund for management fees, taxes and qualified expenses. The management fee shall differ for each type of fund and will cover the costs of investment research, management, marketing and routine administrative expenses of the trustee.

All equity funds are up, rising side by side with the Philippine Stock Exchange index (PSEi). Most bond funds, meanwhile, are in negative territory. Summarized below are comparative returns of each UITF in the Philippines. Performance is tracked from the start of January 2014 until the end of February. To give investors guidance in evaluating the consistency of returns of each UITF, we also show the 1-year, 3-year, and 5-year returns of each fund. 

      The best-performers UITF, so far, are: For Peso Equity - Union Bank (Capitalization Philippine Equity Portfolio; AB Capital Equity Fund; UCPB (United Equity Fund); BDO Peso Equity Fund; and For Peso Balanced - BDO Peso Balanced Fund; UCPB (United Balanced Fund); and Metrobank (Metro Balanced Fund).

2014 UITF PERFORMANCE REPORT - Unit Investment Trust Funds in the Philippines
Year-to-Date (YTD) Returns as of February 28, 2014

February 2014 Performance of Philippine Equity UITF

Peso Equity UITFs	Fund Name	February 2014 YTD Gain (Loss) %	1-Year Gain (Loss) %	3-Year Gain (Loss) %	5-Year Gain (Loss) %
Security Bank Corporation	SB Peso Equity Fund	10.96%	-3.74%	18.57%	N.A.
Philippine National Bank	Allied Unit Performance Equities Fund	10.50%	-11.54%	11.54%	9.91%
AB Capital and Investment Corp.	AB Capital Equity Fund	9.93%	2.77%	22.35%	34.28%
Bank of the Philippine Islands	BPI Philippine Equity Index Fund	8.96%	N.A.	N.A.	N.A.
United Coconut Planters Bank	United Equity Fund	8.89%	-3.01%	17.75%	33.85%
Philippine National Bank	High Dividend Fund	8.81%	-6.86%	N.A.	N.A.
Metropolitan Bank and Trust Company	Metro Equity Fund	8.74%	-3.28%	17.48%	27.71%
Banco de Oro	BDO Peso Equity Fund (EPCIB Equity Fund)	8.30%	-2.22%	20.49%	29.71%
Bank of the Philippine Islands	Odyssey Philippine High Conviction Equity Fund	8.27%	-35.78%	1.38%	22.62%
Bank of the Philippine Islands	BPI Equity Value Fund	8.15%	-3.31%	13.95%	19.34%
Bank of the Philippine Islands	Odyssey Philippine Equity Fund	7.89%	-23.68%	7.93%	22.04%
Banco de Oro	BDO Sustainable Dividend Fund	7.82%	N.A.	N.A.	N.A.
Bank of the Philippine Islands	BPI Philippine High Dividend Equity Fund	7.80%	N.A.	N.A.	N.A.
Unionbank of the Philippines	Large Capitalization Philippine Equity Portfolio	7.61%	-2.12%	22.34%	45.27%
China Bank	CBC Equity Fund	7.03%	N.A.	N.A.	N.A.
Philippine National Bank	Enhanced PSEi Reference Fund	6.95%	-8.24%	15.59%	13.80%
Philippine Bank of Communications	Value Equity Fund	6.23%	N.A.	N.A.	N.A.
Rizal Commercial Banking Corporation	RCBC Rizal Equity Fund (Tiger Equity Fund)	5.95%	-1.29%	13.24%	24.26%
Banco de Oro	BDO Focused Equity Fund	5.80%	N.A.	N.A.	N.A.
Asia United Bank-TIG	AUB Equity Investment Fund	5.63%	-2.56%	15.82%	20.91%

February 2014 Performance of Peso Balanced UITF

Peso Balanced UITFs	Fund Name	February 2014 YTD Gain (Loss) %	1-Year Gain (Loss) %	3-Year Gain (Loss) %	5-Year Gain (Loss) %
Banco de Oro	BDO Peso Balanced Fund	6.67%	-5.44%	14.04%	20.12%
Security Bank Corporation	SB Peso Asset Variety Fund	5.67%	-1.23%	15.06%	15.21%
United Coconut Planters Bank	United Balanced Fund	5.47%	-0.81%	14.18%	21.54%
Unionbank of the Philippines	Unionbank Peso Balanced Portfolio	5.33%	-3.58%	12.80%	N.A.
Philippine National Bank	Mabuhay Prestige Balanced Fund	4.89%	-4.61%	9.86%	6.83%
AB Capital and Investment Corp.	AB Capital Balanced Fund	4.73%	N.A.	N.A.	N.A.
BPI	Balanced Fund	4.50%	-2.68%	10.77%	14.84%
Metropolitan Bank and Trust Company	Metro Balanced Fund	4.09%	-3.87%	11.80%	18.06%
BPI (formerly managed by ING)	Odyssey Diversified Balanced Fund	3.78%	-17.25%	9.08%	16.17%
China Banking Corporation	CBC Balanced Fund	3.50%	N.A.	N.A.	N.A.
RCBC	Rizal Balanced Fund	3.40%	N.A.	N.A.	N.A.
Philippine Bank of Communications	Best Balanced Fund	3.23%	N.A.	N.A.	N.A.
Landbank of the Philippines	Growth Fund	2.85%	-2.73%	6.52%	16.22%
Sterling Bank of Asia	Sterling Balanced Fund	2.41%	N.A.	N.A.	N.A.
BPI (formerly managed by ING)	Odyssey Diversified Capital Fund	1.78%	-8.27%	11.04%	14.30%
Development Bank of the Philippines	Gintong Sikap Secure Fund	0.10%	0.71%	1.79%	N.A.

 Source:  www.uitf.com.ph