FREQUENTLY
ASKED
QUESTIONS
UNIT INVESTMENT TRUST FUND (UITF)
FREQUENTLY ASKED QUESTIONS (FAQS)
  1. What is a UITF? A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in pesos or any acceptable currency and are made available by participation. The UITF is operated and administered by a trust entity. Each UITF product is governed by a Declaration of Trust (or Plan Rules) which contains the mechanics for investing, operating and administering the fund.
  2. Do UITF's have a maturity date? UITFs do not have a maturity date because it is open-ended.
  3. Why should one invest in a UITF? Participants in UITF may avail of the following benefits:
    • Diversification. UITFs are invested in different types of financial instruments that spread out the risk across these various instruments. Additionally, UITFs are mandated to maintain its exposure in a single entity and its related parties to under 15% of the market value of the fund except for investments in government securities.
    • Liquidity. UITFs are invested in securities that are marketable and tradable which allows the fund the flexibility to fund any redemption of participants.
    • Affordability. UITFs generally have low minimum participation amount which makes them more accessible to retail investors.
    • Better earnings potential. There are opportunities for potentially higher returns due to possible marked-to-market gains on top of accrued income from investments. UITFs provide access to financial instruments not readily available to retail investors.
    • Exempt from Reserve Requirements. UITFs are not subject to reserve requirements imposed on bank deposits.
    • Professional Fund Management. UITFs are managed by professional fund managers and as a participant to the fund, the client gains access to the fund manager's expertise for possible investment opportunities.
    • Regulated product. The administration and management of each UITF is governed by the Bangko Sentral ng Pilipinas (BSP). Each UITF is subject to a separate annual audit by a BSP accredited independent auditor. Additionally, the UITFs are required to have a BSP accredited third party custodian, who is tasked with safekeeping the securities of the UITF and performing independent marking-to-market of such securities.
    • Transparency. The NAVPU of each UITFs is published weekly. This would give the client an opportunity to compare investment performance of different UITFs across the different financial institutions.
  4. What are the basic types of UITF's available in the market?
    • Money Market UITF: The fund is primarily invested in fixed income debt instruments with a tenor of less than a year. As the fund is invested in short term securities, the probability of the actual returns deviating from the expected returns is low.
    • Bond UITF: Investments in fixed-income debt instruments namely government securities and corporate bonds with a tenor of more than a year are the primary investments of this type of UITFs. With this, the fund will have a higher expected return but will have a higher probability of deviation from expected returns.
    • Balance UITF: The fund is invested in a mix of equities and fixed income securities. The fund targets to generate a higher return due to its investment in equities but there is a higher possibility of potential losses.
    • Equity UITF: The fund is primarily invested in equities that are listed in the stock exchanges. This fund has the highest potential for greater returns or losses.
  5. What is a Net Asset Value (NAV) and Net Asset Value Per Unit (NAVPU)? Net Asset Value is the total market value of each investment in the fund less fees, taxes, and other qualified expenses, as defined under the plan rules. Net Asset Value Per Unit is the price of a unit of participation that shows the current value of each unit being invested in. To compute the NAVPU, the NAV is divided by the total number of units of participation in the fund.
  6. Are the returns from UITF investments guaranteed? No, the UITF are subject to mark-to-market valuation of all its existing investments. The NAVPU may fluctuate depending on the volatility of the market prices of the investment. The UITF can show a historical performance for the client to gauge the performance of the fund for that period but this is never a guarantee of any future performance.
  7. Are UITFs insured by Philippine Deposit Insurance Deposit (PDIC)? No, UITFs are not deposit product thus they are not insured by the Philippine Deposit Insurance Corporation (PDIC).
  8. What are the potential risks in investing in a UITF?
    • Interest Rate risk. The potential for an investor to experience losses due to changes in interest rates;
    • Market/Price risk. The potential for an investor to experience losses due to changes in the market prices of securities (e.g. bonds and equities);
    • Liquidity risk. The inability to sell or convert assets into cash quickly or where conversion to cash is possible but at a loss;
    • Credit risk. The possibility of loss due to a borrower's or issuer's failure to repay principal and/or interest on securities issued;
    • Reinvestment risk. The possibility of having lower returns or earnings when maturing funds or the interest earnings of funds are reinvested;
    • Foreign Exchange risk. The possibility for an investor to experience losses due to fluctuations in foreign exchange rates; and
    • Country risk. The possibility for an investor to experience losses arising from investments in securities issued by/in foreign countries due to the political, economic and social structures of such countries.
    • Regulatory Risk. Changes in laws and regulations that could adversely affect the value and return of the investment.
  9. How do clients determine which UITF will suit their needs? Before any investment in UITF, the client must accomplish a Client Suitability Assessment (CSA) form to determine their risk profile. A certified UITF Sales Person may assist the client in accomplishing the CSA. In accomplishing the CSA, the clients have to determine the degree of risk they are willing to take and the length of time they are willing to invest their funds. The result of CSA will serve as the basis for any recommended UITF products to invest.
  10. How do I monitor the performance of my investment? To monitor the performance of your UITF investments, the NAVPU of the different UITFs are available in the following channels:
    • PBCOM Corporate Website (http://pbcom.com.ph)
    • UITF Industry website (https://www.uitf.com.ph)
    • PBCOM Trust Online Portal (TOP) (https://mytrustinvests.pbcom.com.ph)
  11. Where can I find information updating me about the investments and performance of the PBCOM UITFs? BSP regulations require the trustee to make the Key Information and Investment Disclosure Statement (KIIDS) available of each UITF to its participants at least every calendar quarter. The KIIDS includes the fund's performance and portfolio mix of the investments. It also lists the outstanding and prospective investment outlets of each UITF. The KIIDS is available on the PBCOM Corporate Website (http://pbcom.com.ph) and in the PBCOM Trust Online Portal (https://mytrustinvests.pbcom.com.ph)
  12. How much do trustees charge UITF investors? The trustee shall charge management fees, taxes and qualified expenses to the fund. The fees are part of the plan rules of each UITFs. The management fees covers the costs of management, marketing and other administrative expenses of the trustee.
  13. Are investment proceeds from the UITFs subject to taxes? Yes. During the computation of the NAVPU, taxes are deducted from the fund.
  14. Are there any penalties when investing in PBCOM UITFs? All PBCOM UITFs are subject to a 30-day minimum holding period. Redemption of your UITF investment within the holding period will be subject to an early redemption fee, which will be deducted from your redemption proceeds. For the PBCOM Money Market Fund, the early redemption fee is 0.125% while the PBCOM Value Equity Fund and PBCOM Best Balanced Fund have an early redemption fee of 0.25%. The redemption fees are based on the redemption proceeds before redemption fee.