All You Need to Know About UITFs

By: Hadj Cabonegro

There are many ways of stepping into the world of investing for newcomers out there, and one of these tried and true methods is getting into a Unit Investment Trust Fund (UITF). Whether you’re planning on purchasing stocks, bonds, or RFO units in Cavite for your upcoming or preexisting portfolio, knowing about the basics of what exactly is a UITF will aid you in your own journey to achieving financial stability.

Starting with understanding the concept of what Unit Investment Trust funds (UITFs) are as a whole, they can be defined as a collection of investments that are funded by multiple investors. Depending on the UITF in question, the type of investments that can be found in them may vary, ranging from the standard stocks and bonds, foreign currency, and more. The investor is also not responsible for selecting and managing the assets of the UITF, but rather the trustee or fund manager instead.

For those who want to know more about what Unit Investment Trust Funds are, below are further information covering the aforementioned topic.

Unit Investment Trust Funds (UITFs) Are Not The Same as Mutual Funds (MFs)

An important piece of info to be made aware of when it comes understanding what a UITF is, is that it is significantly different compared to Mutual Funds (MFs). While it is true that both MFs and UITFs are similar in terms of how they work, each have their own distinct features, advantages, and disadvantages that may or may not suit the needs of certain investors.

For starters, UITFs are managed by a trust entity such as a bank or trust corporation, which then answer to the Bangko Sentral ng Pilipinas (BSP). MFs on the other hand, are ran by fund houses and insurance companies that are then supervised by the Securities and Exchange Commission (SEC). Investing on a UITF also doesn’t come with an upfront fee, unlike in the cases of some MFs, which does require you to pay a fee first as a part of the purchasing process.

There is also the difference in terminologies that are used between UITFs and MFs, with the ownership of the former referred to in ‘units’ and the latter’s case as ‘shares’.

You Can Choose to Invest in the UITF That Fits Your Interest and Risk Tolerance

As mentioned earlier on, a UITF can be a multi-asset pool of investments that can come in a variety of types and sources. Depending on the investment objective and plan rules of the UITF in question, you can easily find a UITF that better suits your needs and goals for your financial future.

For conservative investors out there, potential UITFs that they may start investing on are those that based on either a money market fund or a bond fund, such as the Peso Money Market Fund by Asia United Bank for the former or Security Banks’ SB Peso Bond Fund for the latter. To investors out there who are more willing to take a risk but still want to play it safe, there are the balanced fund UITFs to consider, which incorporates a mix of conservative and risky securities. Lastly, for the aggressive investor who are willing to go for high-risk high-reward investments, an equity UITF may be what they’re looking for, with examples of such UITFs including: the SB US Equity Index Feeder Fund and the RCBC US Equity Index Feeder Fund.

Depending on how much you might change during the course of your career in the field of investing, you may opt to invest in whatever form of UITF would be the best for your circumstances so long as you know what you’re doing.

The Client Does Not Control the Allocation of the Fund, Only the Trustee Shall be Responsible

Another essential condition to remember for first timers who may be contemplating on purchasing a number of units of participation in a UITF that have caught their interest is that they would have no authority as to how it would be managed. Depending on your background and experience when it comes to making investments, this fact can either be a positive or a negative.

Newbie investors who have yet to fully understand the intricacies of investing may find that building their portfolio with UITF units may be the best option for them, since they’d leave the majority of the work and research to their fund managers instead. For experienced investors who are more confident with making financial decisions however, relying on a fund manager to choose what assets to buy may tick them off the wrong way, particularly if they believe that they can make better choices instead. Depending on your personality, experience, and/or free time, letting someone else be responsible with how your money would work for you would need quite a bit of introspection before settling on a final decision about it.

A possible risk that can be associated with this aspect of UITFs are the presence of incompetent fund managers, who could easily mismanage yours and your fellow investors’ funds if you haven’t done any prior research beforehand.

To summarize, Unit Investment Trust Funds consist of a pool of assets that were invested on by a fund manager using money sourced from multiple investors. It shares a semblance with Mutual Funds but has its own distinctions, it has multiple variations that can make them distinct from one another, and it is the trustee and not the investor who manages how it operates on the market.

Aside from UITFs, there may be some investors out there who may be more interested in securing individual assets for themselves that they could fully control. For those who are looking to purchase one or more premium RFO units in Cavite, an excellent developer to turn to for upscale properties is Crown Asia.

With a multitude of prime real estate to choose from in Luzon, Crown Asia offers many choice selections to pick from when it comes to condominium units. One such example is their Tagaytay-based Pine Suites, a Danish-inspired resort condominium consisting of many 2-bedroom RFO units with complete access to the building’s resident’s only amenities. There is also the upcoming Pinevale that is also located in Tagaytay, the first-ever smart home condominium composed of nine residential towers and an abundance of 1-bedroom units as well.

When searching for the best RFO units in Cavite to invest in, consult with a Crown Asia representative about available units for sale today.

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