Unit Investment Trust Funds

What are UITFs?

Unit Investment Trust Funds (UITFs) are ready-made investments that allow the pooling of funds from different investors with similar investment objectives.  These funds are managed by professional fund managers and are invested in various financial instruments such as money market securities, bonds and equities, which are normally available to bigger investors only.

In a UITF, the value of each participating unit or Net Asset Value per Unit (NAVPU) is a reflection of the current market prices of the instruments that make up the UITF. Therefore, the NAVPU will rise when market prices rise and fall when market prices fall. When market prices rise, the UITF participant enjoys higher returns because re-valuations result in capital gains on top of the accrued income. When market prices fall, the UITF participant is exposed to capital losses which may be avoided by deferring redemption until market conditions become favorable.

Each UITF is established, administered and maintained in accordance with a written trust agreement or "plan" drawn by the trust entity, approved by its Board of Directors, and approved by the Bangko Sentral ng Pilipinas (BSP). UITFs are governed by BSP Circular 447 whose goals are to align the operation of pooled funds under management by trust entities with international best practices and to ensure differentiation of such pooled funds from bank deposits and other direct liabilities of financial institutions. The UITFs are also governed by BSP Circular 593, which defines the industry standards for UITF client suitability assessment and risk disclosures.

It is thus apparent that UITFs are highly regulated and trust entities offering these are closely supervised by BSP to ensure investor protection.

UITF Products