Philippine UITFs You Can Invest In From P1,000 And Up

The Top 5 Philippine UITFs

So you’ve saved up and now you’re ready to level up financially. However, you’re intimidated by the world of investments. But contrary to popular belief, you don’t need a lot of money to start investing. Even if you don’t have the money or time to devote to stock picking and all the work that goes into hardcore investing, you can still enjoy the benefits by participating in unit investment trust funds.

We’ve even picked out the best Philippine equity UITFs that you can start investing in right now. If you already know how UITFs work, skip straight to the top five equity UITFs you can invest in from P1,000 and up. We’ve chosen UITFs you can start for as low as P1,000, and no more than P10,000 minimum requirement. But if you want to learn more about the basics, read on.

What are UITFs?

According to BDO, “Unit Investment Trust Funds (UITFs) are ready-made investments that allow the pooling of funds from different investors with similar investment objectives.” The pooled funds from investors (that’s you) are then managed by professional fund managers, who invest it in different financial instruments depending on the type of UITF you’ve invested in.

Each UITF has its own Declaration of Trust which tells you how the fund is governed. The fund manager will also release quarterly and yearly reports containing a breakdown of the fund’s performance.

What types of UITFs are there?

The most common types of UITFs are: money market, fixed income, balanced, and equity. Money market and fixed income UITFs are more conservative, while balanced is, well, more balanced. In this article, we’re going to focus on the more aggressive type of UITF, equity, because they have the highest expected returns among UITFs. Because equity UITFs are aggressive, it’s recommended that you’re invested for the medium term, at least 1 – 3 years.

Equity UITFs invest in equities listed in the stock exchanges (hence the name). For example, Security Bank Peso Equity Fund’s top 3 holdings (as of the November 2014 performance report) are Nickel Asia Corporation, DNL Industries, and International Container Terminal, while BDO Institutional Equity Fund’s are PLDT Co, Ayala Land, and SM Investments (according to their November 2014 statement). The holdings of each UITF depends on the fund’s investment strategy, which you can read about in their Declaration of Trust and regular reports.

This is good news for you because even if you just have P10,000, by investing in an equity UITF you’re diversified by default. Your investment is tied to the performance of the Philippine Stock Exchange as a whole and not just one company. Most of these equity UITFs use the Philippine Stock Exchange as their benchmark (aiming to outperform it), so if the market is doing well, your investments should be doing even better.

bdo uitf

Here’s an example of an equity fund’s performance over time compared with the bench mark (in this case, the Philippine Stock Exchange index). The dark blue line is the fund, and the yellow line is the PSE index.

How does it work?

You, the investor, buy “shares” or units of the fund at the market value, called Net Asset Value Per Unit (NAVPU). This value reflects the market prices of the underlying stocks. NAVPU is recalculated daily.

So let’s say the NAVPU of a certain Philippine UITF is P2.00 and you participate in the fund with P10,000. This means you get 5,000 units, and you get a certificate saying so. Now let’s say you stay invested for one year, and the NAVPU is P3.00 one year later. When you redeem your 5,000 units, you’ll receive P15,000.

But if the NAVPU went down and is now only P1.00, you’ll only be able to get P5,000 with your 5,000 units. If this is the case, you should wait until the NAVPU has recovered.

How do you participate in a UITF?

It’s as simple as walking into your bank and opening an investment fund account. The bank will usually ask you to take an assessment which measures your risk appetite, and then they’ll present you with the investment options that match. After that, just have the minimum initial investment required on hand, and you can start investing.

Which equity UITFs should you choose?

While past performance does not guarantee future returns, you should look at the medium-term performance of UITFs over the last three years to help you decide. Below, we’ve listed the best-performing equity funds from January 5, 2012 to January 5, 2015 that you can participate in for only P10,000. We’ve also added data like holding period and trust fees, as well as the return on investment from 2012 – 2015 so you can see how the fund managers have performed and what you can expect from the fund.

Security Bank Peso Equity Fund

  • Initial investment: P10,000
  • Minimum additional: P5,000
  • Holding period: 30 days
  • Early redemption fee: 0.50% on total net redemption proceeds
  • Trust fees: 1.50% per annum
  • Settlement period: 4 days
  • ROI (Jan 5, 2012 to Jan 5, 2015): 92.6943%

Banco de Oro Institutional Equity Fund

  • Initial investment: P1,000
  • Minimum additional: P1,000
  • Holding period: 30 calendar days
  • Early redemption fee: 0.50% of Original Participation Amount
  • Management fee: 1.00% per annum
  • Settlement period: 5 banking days after notice of redemption is received
  • ROI (Jan 5, 2012 to Jan 5, 2015): 67.6632%

PNB Enhanced Phil-Index Reference Fund

  • Initial investment: P10,000
  • Minimum additional: P10,000
  • Holding period: 30 days
  • Settlement period: 3 banking days after redemption
  • ROI (Jan 5, 2012 to Jan 5, 2015): 52.3774%

UCPB Equity Fund

  • Initial investment: P10,000
  • Minimum additional: P5,000 (if over P5,000, should be in increments of P1,000)
  • Holding period: 30 calendar days
  • Early redemption fee: 5% of amount redeemed
  • Management fee: 1.75% per annum
  • Settlement period: May redeem units on the 31st calendar day for settlement on the 34th calendar day
  • ROI (Jan 5, 2012 to Jan 5, 2015): 49.6188%

Philippine Bank of Communications Value Equity Fund

  • Initial investment: P10,000
  • Minimum additional: P10,000
  • Holding period: 90 calendar days
  • Early redemption fee: 0.25% of redemption value
  • Trust fee: 1.50% per annum
  • Settlement period: 3 banking days from redemption
  • ROI (Jan 5, 2012 to Jan 5, 2015): 45.4910%

Before investing in UITFs, remember that none of the returns are guaranteed, so have an emergency fund first so that you’re covered if the worst does happen to your investments. And when the time comes to choose a UITF to invest in, go with the one that most matches your risk appetite and looks set to provide you with the best returns based on historical performance.

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