How to Invest in Mutual Fund in the Philippines or Abroad

Are you still dreaming of that dream vacancy you want? In life, it’s always nice to be financially secured. The future is quite uncertain that’s why we need a type of investment that can help us in our long-term goals.

We need an investment that offers opportunities to OFW’s too so here comes Unit Investment Trust Funds.

So far, it has been quite successful in generating returns and the performance is good.

One of the best saving tips is to invest in this kind of security because not only is there no need for monitoring, it provides you with security and good returns in the future.

What is Mutual Fund?

A mutual fund is basically a vehicle of investment that is composed of a funds’ pool; the funds are supposed to be collected from a number of investors for making investments in different securities like bonds, instruments for making money, stocks and another such type of assets. There are different managers of money who work for the operation of mutual funds; they invest the capital of funds and make attempts for producing the capital gains as well as the income for the investors of the funds.

Pros and cons of buying Mutual Funds in Philippines:

There can be a number of advantages of buying mutual funds in the Philippines because of its current stock market position and other circumstances. Mutual funds are supposed to offer the diversification, they are managed in a professional way, they have different varieties, and they offer reinvestment automatically as well as transparency. There can be a lot more of pros favoring the circumstances in the Philippines. Some of the cons can be: they have some kind of hidden fees; they do not have guarantees, etc.

13 things that should be known about buying a Mutual Fund:

  1. All of the mutual funds are supposed to have some of the expenses internally. These expenses are actually the fees that are associated with the funds that are running already. They are supposed to cover the expenses of accounting, trading and other such stuff. It is to be remembered that these fees come up from the return of the investors.
  2. It is to be known that how the mutual funds are supposed to trade. Basically, the mutual funds do not trade like a stock on the market. When an investor either buys or sells a fund, he can buy as well as sell this fund from the company of fund. Because of this methodology of trading, the actual time of buying and selling the fund becomes meaningless.
  3. The mutual funds are not supposed to be taxed in the same way as the stocks. They are to be taxed on the basis of the way that the manager of trades funds all the securities inside the fund. If there is a manager of fund who sells a particular stock in the portfolio on the present day and gets a gain, then the tax that comes on the particular gain is to be passed to the shareholders.
  4. There must be some of the guidelines for investment that should be followed by the managers. By knowing that the manager of your fund is only able for investing in a specific stock type, it can be helpful for you to know about the thing in which you are supposed to be invested in; however, it can also be disadvantageous if that specific class of asset is in a trend that is going downwards.
  5. The returns in mutual funding are such that they are fluctuating. In mutual funding, there is always such a possibility that the mutual fund’s value will be depreciated. While deciding about a specific fund to be bought, there is a need for researching the risks that are involved.
  6. There is very little control offered by the mutual funds. If somebody has chosen a mutual fund for investing in the money control, it is having a lot for coming to an end. Apart from the funds, while being unwilling for divulging all of the info, oftentimes they are not able for seeing since the trading on day to day basis is considered to be very vast.
  7. There is a lack of liquidity in mutual funds. Well, there are a number of mutual funds invariance in the world of investment; however, that does not always mean that they are considered to be liquid. With mutual funds, the transactions are not supposed to be complete until a day of trading ends up.
  8. No doubt that diversification is considered to be a key for making your investment successful; however, a number of investors of mutual funds can tend to something like over-diversification. The main idea of diversification is the reduction of the risks that are associated with a single security.
  9. In the field of mutual funding, the advertisements of a number of funds that are considered to be misleading can give guidance to the investors to go on the wrong path.
  10. There are such records of tracks that are audited with the mutual funds. There is a need by the company of mutual fund for maintaining the records of the tracks of performance.
  11. There are no guarantees in mutual funding and sometimes the investors have to face some panic in selling.
  12. There is offered transparency by the mutual funds. The holdings of mutual funds are supposed to be available publicly; it ensures that all of the investors are getting the output for what they pay.
  13. There are fluctuations in the styles of investment in mutual funds.
    Ever wonder how you can save more? Where to invest money in the Philippines? – If you’re one of those OFWs who want to save more money and probably wondering what’s the best way to do that without eating up too much of your time and effort, wonder no more because UITF has come to solve your investment dilemmas.

    Considered as probably one of good OFW investment tips that you can master, UITF investments aims to target long term savings for anyone interested to join.

    With 80/20 of work done, 20 for the work you’ll do and 80 for the profit you’ll get from this type of investment, you’ll surely gain a lot from UITF. Here’s a simple and best guide for all Filipinos abroad who want to save up a lot for the future.

1. What is UITF?

UITF or Unit Investment Trust Fund is a collective investment fund offered by banks and handled by experts to ensure high yield and quality returns. It’s a good investment choice if you don’t have enough time or knowledge when it comes to actual stock trading because the experts are always in aid to manage your investment through securities, bonds, equities, and other instruments. These experts are trained to invest properly and are objective when it comes to good investing.

Since professional fund managers are responsible in making investment decisions, you need not to have the expertise of experience since this is a passive investment between you and the bank. As an investor, you get to invest in assets that may normally not be accessible like expensive stocks or high-yielding corporate bonds typically offered only to institutional investors.

Different Kinds of UITF

Stock or Equity UITFs This invests on stocks. This is ideal if you don’t want to touch your investment for at least 19 years and good if you’re going to have this investment for your retirement.
Bond UITFs This invest in bonds which means they are lending money to a government or company. You’ll have a certain interest rate because of the money you have lent. If you’re someone who’s planning to save money for car or house this is a good UITF for you.
Balanced UITFs This type balances money between stocks and bonds. This is ideal if you want to have a safe zone for those who wants to gain a lot from stocks and at the same time gain interests.
Money Market UITFs This one invests on the money market which means dealing with short term loans. It’s good as emergency funds and for storing funds that you’ll use for next years to come.

2. How UITF Works?

If you’re interested to save up your money in this type of venture, you’re probably wondering how to start in UITF?

Any potential investors are welcome to drop by on any branches of local banks they want to open a UITF account. You would be guided by the special representative for Trust Investments and assist you by introducing the various investment offerings. Complete the information needed for the Client Suitability Assessment form and once you’ve decided which kind of UITF you want to have, you’re all set to start your investment. In the Philippines, one can open for a unit investment trust fee for as low as ₱10, 000.00.

What are the benefits of UITF?

Diversification By investing in a UITFs, risks are spread out across the various investments held by the pooled trust fund.
Liquidity UITFs are designed to allow you to can redeem units of participation at any time.
Affordability UITFs generally require a much lower minimum investment amount compared to other investment alternatives.
Better earning potential 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. Thus, your funds earning potentials are maximized
Professional Fund Management UITFs allows you to gain access to the expertise and services of seasoned fund managers who are able to actively monitor the markets for possible investment opportunities and managed the risks for you.
Transparency Trust entities are required to publish the UITF price at least weekly, allowing investors to compare investment performance of various fund managers.
Regulated Product The management and administration of UITFs by Trust entities are governed by the Bangko Sentral ng Pilipinas (BSP). Thus, aside from the yearly triple audit conducted to BDO Trust, each of its UITF is subject to a separate annual audit by an independent auditor that is acceptable to the BSP. All these safeguards redound to the protection of the UITF investors.

3. What is UITF 40?

UITF 40 details the rules for accounting for revenue from service contracts. A revenue for service contracts now need to be accounted for under what is known as the ‘stage of completion method. This means that if a contract is in progress at the year-end, then the supplier of services would include the proportion undertaken to that date in its accounts. Profit cannot be deferred by leaving jobs in work-in-progress after they have reached a billable stage. So if the contract is 75% complete, 75% of the contract value will be recorded in the accounts. The fact that the amount may not be billable or recoverable from the client at that stage is not relevant.

4. Can OFWs invest in UITF even when they’re abroad?

Yes, they can. Several bank require personal appearance for a potential investor to open UITF account with them. But you don’t have to worry because some of these banks also help people from overseas to open the same account.

Unit Investment Trust Fund (UITF) Companies

Here are some of the banks that offer top investment trust funds in the Philippines.

If you have PNB account, you can open UITF account online. They also have the “Global Filipino Funds” UITF, specifically for OFWs and available as a peso money market fund or a dollar money market fund.

If you have existing and active BDO, BPI or Metrobank account, you can contact your Philippine branch via e-mail or telephone and they can help you with your application for UITFs by sending you the required forms, which you can fill out, sign and then send via courier.

How do I open an investment account/what are the requirements?

Step 1: Simply visit any nearby Metrobank branch and our branch personnel will guide you in determining the fund that is appropriate to your needs and risk profile.

Step 2: They will also assist you with opening your account.

Step 3: You will be required to present a valid government-issued Identification Card (e.g. Passport, Driver’s License, TIN, etc.) and accomplish some forms.

Unit Investment Trust Funds (UITFs) are NEITHER a deposit account NOR an obligation of, NOR guaranteed, NOR insured by the METROPOLITAN BANK & TRUST COMPANY or its affiliates or subsidiaries, and therefore is not insured or governed by the Philippine Deposit Insurance Corporation (PDIC).

Now before we get to the investing phase, it’s best to know what type of investment you want to get into by visiting Metrobank’s page containing its products and services. So far, there are three types of Unit Investment Trust Funds by Metrobank and these are the following: Metro Aspire Equity Feeder Fund, Metro Aspire Bond Feeder Fund and Metro Aspire Balanced Feeder Fund. There are also available Mutual Fund Investments in the page you can choose from.

Generally, anyone can open a UITF account at Metrobank so this poses a great investment opportunity offered to OFWs. Opening is made easy and there’s no need for any orientations. If you are a beginner in investing, you can just scroll through the internet for information or you can also purchase investment books for self-learning. It doesn’t really entail too many jargon’s. All you have to do is know the basics. To open an account, you need to physically appear before a Metrobank branch since there is no online enrollment yet.

The NAVPU rate is indicated in the page so you can update once in a while. You can open or get a Metrobank UITF account by just visiting the branch you intend to open with. You will know that you have successfully enrolled when you are given their certificate.

Metrobank offers the best products and services. This includes a good performance in their mutual funds and other treasury products. It’s also one of the best UITFs in the Philippines.

But there are also a lot more type of investments out there. One of the safest is the Philippine Stock Index which provides enough cushion for the safety of your assets. Though there’s still risk, it is heavily compensated with a reward such as a good return on the investment. But whatever investment you choose, it should match your own level of risk appetite so it can be tolerable on your part.

As our age increases, our appetite for risk decreases as we wish for safety and stability in terms of income or cash flows. So the best tip is to invest more while we’re still young and while we can handle such risk. Also, we should not invest all of our money since we still have expenses to pay.

 

Maggie

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

 

 

 

 

 

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