Benefits of Investing in UITF

by Gily Tenorio on January 31, 2012



Investing in UITF is one of the investment opportunities that is becoming popular in the Philippines these days. Basically, mutual funds and UITF are similar in concept and investing method. The differences in the two are the company managing the fund and the regulator of the fund. Maybe you already know that UITF is offered only by banks through the authorization of BSP. On the other hand, mutual funds are offered by an investment company regulated by the Securities and Exchange Commission (SEC).

Compared with time deposits and savings account, there is a higher profit that you can get from UITF. Depending on which type of UITF, your profit or return on investments will greatly vary. If you would like to learn more about the benefits and advantages of investing in UITF, you should continue reading because I’ll list it all here in this post.

1. Low Capital Investment

Investing in UITF requires a low capital investment of minimum P5,000. However, it depends on the investor how much he will invest but the initial deposit should be at least P5,000. In my opinion, this amount is not big especially if you have a regular job and it can be easily raised once you are serious in investing.

The capital investment in stocks is around P25,000 which is much higher than UITF. However, lately, online stock brokerage companies like CitisecOnline and Philstocks have lowered their initial opening deposit for new account at P5,000. But I would still recommend for you to invest a bigger amount, you should do it to buy more shares.

2. Liquidity

Some people and investors might be concerned on how to liquidate their UITF investments. I think there would be no problem with this one because it is one of the most liquid investments. Though, you may need to wait for 3-5 days before you could actually get your investment deposited in your bank account. There are some factors that will affect the liquidation of UITF, one would be is the status of your redemption. There should be no problem with your account and the redemption form you passed.

3. Accessibility

Since UITF is offered by most of the biggest banks in the Philippines, it can be obtained by almost all people because they only need to visit a bank to be able to open an account. However, there are only small percentage of Filipinos who know this type of investment but hopefully more and more individuals will consider this one in the near future.

In addition, there are many banks now compared in the past ten years so accessibility in investing in UITF will not be a big problem for people who wants to try this kind of investment.

4. Diversification

In investing, diversification is very important and many financial planners would advise to invest your money in various ways since most of these investments have no guarantee of capital. UITF invests the funds in different forms like stocks, bonds, treasury bills, debt securities, high-yield savings account, and other fixed-income instruments.

The purpose of diversification is to minimize the risk of losing money from a single investment. For example, if you invest all of your money in stocks and a global economic crisis happened again, there is a higher chance that the value of stocks will fall and so the amount of your investment.


5. Professional Management

UITF is managed by professional managers and investors who study and research where and how to invest the funds according to its goals. It is not like gambling which depends on luck. Many of these managers have long years of experience and very competent in the world f investing so you will be assured that your money is not bet on lottery.

6. Security

As one form of legitimate investment in the Philippines, UITF provides security on the investors by selecting the right investment strategies. This task is done by the fund managers. You will be assured that the money you invested will not fall into scams or frauds.

As a way to protect investors, Bangko Sentral ng Pilipinas (BSP) supervises and regulates all UITF companies in the country to make sure that all of them follow the investing guidelines set by the central bank.

7. Higher Returns

The performance and returns of UITF depends on its type. Normally, equity fund gives the highest return among all the funds but the riskiest since it is invested in the stock market. Money market fund has the lowest return in most of the companies offering this type of investment.

Compared with savings account and time deposits, it is far better to put some of your money in UITF to diversify your investment. Some part will go to savings, some will go to investments. If you want higher returns, then investing in UITF will be one of the good options.


Image Credit: dream designs

Comments on this entry are closed.

JR Rosales February 15, 2012 at 05:38

uitf or mutual fund?

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