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Investing in Unit Investment Trust Fund (UITF)

Oct 30, 2015 |

While working on paying off debts, using the 10, 10, 10 and 70 formula from Jim Rohn, and ideas from the book Richest Man in Babylon by George Clason, you will find enough amount of money to put in your investment fund.  For a busy person like me who would like to make his money grow, a UITF or Unit Investment Trust Fund would be a good option.  This kind of investment will allow you to invest to different types of funds with less time to spend for managing your portfolio. Since it’s a part of your investment, the money should be kept invested so that you will make your money earn more money for you. And to participate with the economy of the Philippines, I would be investing with the Index Fund.

What is Unit Investment Trust Fund

Unit Investment Trust Fund is an open-ended pooled trust fund is operated and administered by a trust entity and made available by participation. Each Unit Investment Trust Fund 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. You should consider investing in UITF to stay invested in them for a reasonable period of time in order to maximize earnings potentials.

Types of Unit Investment Trusf Fund

Some types of Unit Investment Trust Fund are money market, bonds, stocks (equities), and/or combinations of the three (balanced).

  • 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.
  • Bond Funds – these funds is to invest in a portfolio of bonds and other similar fixed income securities with portfolio duration which may exceed one year. These may further be classified into Intermediate Funds (where the fund mandate limits the duration up to 3 years), Medium Term Funds (where the fund mandate allows a duration of up to 5 years) and Long Term Funds (where the fund mandate allows a duration of greater than 5 years).
  • Balanced Funds – 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.
  • Equity Funds – these funds is to invest substantially in equities. Cash may be kept for liquidity and portfolio re-balancing purposes. As I said above, I prefer the Index Fund over any actively managed equity fund.

Peso Cost Average Strategy

Investing in an Index UITF, the little money budgeted for investing, I add paid-in capital on a monthly basis. You cannot time the market, that’s for sure. Doing the cost average strategy, you will be assured that your investment will be on the average of PSE Index. This is a no-brainer way to make your money work for you with less management and maintenance on your part.

Watching your investment funds grow slowly will be another motivation to keep you moving to your goal!

How about you? What type of investment vehicle are you using to make your money work? If you haven’t started, I can coach you to get you started with Unit Investment Trust Fund.

Here’s to your success with your quest to your Financial Freedom!

Jun Pasion

Topic: Investing in Unit Investment Trust Fund (UITF)

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