What are mutual funds and UITFs?
Money from various investors are pooled together by professional fund managers to make up "baskets" of cash, bonds, stocks, and/or other investment assets. As an investor, your ownership is represented by the number of shares or units you hold in the fund. As share/unit prices (NAVPS or NAVPU) increase, so does your investment's value.
Mutual funds and UITFs are similar such that a fund manager buys and sells securities on behalf of the investors. Basic differences are as follows:.
|
|
Mutual Fund |
UITF |
|
Offered by |
Investment companies |
Banks and Trust Corporations. |
|
What you own |
Shares in the investment company reported in NAVPS (Net Asset Value Per share) |
Units of participation in the Trust Fund reported in NAVPU (Net Asset Value Per Unit) |
|
Voting rights |
Yes |
No |
|
Regulated by |
Securities and Exchange Commission (SEC) |
Bangko Sentral ng Pilipinas (BSP) |
What are the different types of mutual funds and UITFs?
MONEY MARKET
Safest Investment with the lowest return.
Composition: Time deposits, treasury bills, other short-term bonds
Risk level: Very Low
BOND
Provides stability and moderate income.
Composition: Debt instruments with fixed interest rates issued by the gov’t
or private corporations
Risk level: Low
BALANCED
Combines the stability of bonds and the growth of potential stocks
Composition: Government securities, corporate bonds, stocks
Risk level: Medium
EQUITY
Highest risk with the highest potential over the long term
Composition: PSE index, dividend yielding and/or growth stocks
Risk level: High
Why invest in a mutual fund or UITF?
 |
• You can rely on expert fund management. |
| • Low minimum investment. Invest for as low as Php1,000. | |
| • Reduce risk through automatic diversification. | |
| • Always liquid. Buy or redeem anytime. |