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Who can invest in UITFs?
Investment or placement in UITFs is open to both individuals and institutional investors, like corporate funds.
What determines an investor's placements and/or
withdrawals to and from UITFs?
When one invests or becomes a participant in a UITF, the investor is assigned units in the UITF, indicating his pro-rated share in the assets of the fund. The number of units an investor is entitled to in the fund depends on the Net Asset Value (NAV) of the fund at the time of investment. For withdrawals from the fund, an investor’s withdrawal proceeds are also based on the Fund’s NAV at the time of withdrawal and his units held in the fund.
How are UITFs valued?
UITFs are valued using the Mark-to-Market (MTM) method. In using MTM valuation, the Trust Institution managing the UITF accounts for all the incomes that are due the fund’s asset investments, as well as the market values of the said assets, less all the resulting expenses. This is done daily. The resulting values form the Fund’s NAV. When dividing the NAV with the total outstanding units of the fund, one would get the fund’s Net Asset Value Per Unit (NAVPU). The NAVPU is conveyed every banking day to investors.
How does an investor in a UITF earn from his
investment?
An investor earns from the growth in the NAVPU of the UITF. While the rate of return of a UITF is not guaranteed or fixed, UITFs being mostly invested in marketable securities provides better relative yields versus deposits, over the longer haul. This makes up for the near-term fluctuations in the NAVPU of the fund, which is generally a result of short-term market conditions. Full measure of the ROI could be attained over a medium to long term time horizon. |
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