Mutual Fund Basics
Jul 14, 2017MUTUAL FUND AND UITFS BASICS
What are mutual funds and UITFs?
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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:. |
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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?
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MONEY MARKET
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Composition: Time deposits, treasury bills, other short-term bonds
Risk level: Low |
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BOND
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Composition: Debt instruments with fixed interest rates issued by the government or private corporations
Risk level: Low |
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BALANCED
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Composition: Government securities, corporate bonds, stocks
Risk level: Medium |
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EQUITY
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Composition: PSE index, dividend yielding and/or growth stocks
Risk level: High |
Why invest in a mutual fund or UITF?
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• 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. |
