|
Unit Investment Trust Fund Frequently Asked Questions The information contained herein is based upon East West Bank´s own interpretation of the BSP Circular 447 dated September 3, 2004. It is general in nature and not intended to constitute investment advice. Q. What is UITF? A. The Unit Investment Trust Fund is an improved version of the common trust fund (CTF) which is a collective investment scheme that pools the investments of small investors into a larger fund under professional management that is able to access more superior investment opportunities normally not available to individual retail players. The investors share in the gains or losses of the fund, proportionate to their respective participation in the pool. Under the UITF, the concept of Net Asset Value Per Unit (NAVPU) is utilized to value the participation of investment of the investors. As an open-ended pooled fund, investors can freely join or withdraw their investment participation in the fund as often as allowed under the UITF Plan Rules. Q. Why is there a need to convert to the UITF? A. To help develop the Philippine capital markets, the Bangko Sentral ng Pilipinas (BSP) initiated the shift of all common trust funds into the new UITF to align the operation of pooled funds with international best practices and enhance the credibility of pooled funds to provide a better foundation for long-term growth of the industry. Q. Who should invest in the UITF? A. UITF is the best investment choice for an individual, retail investor who, for a small investment amount, can take advantage of investment privileges previously only accessible to wealthy investors. There are various categories of UITFs available in the market, depending on the investment objective of each fund and the risk appetite of its target clientele. EWB is positioning its UITFs as a Money Market UITF, targeted for investors with low risk tolerance and who are seeking stability and capital preservation foremost. In this regard, the portfolio of the Peso Trust Maximizer UITF and the Dollar Trust Maximizer UITF will basically have a short to medium term investment horizon and will consist of purely bank deposits and fixed-income securities. Q. Why should I invest in the UITF? A. The UITF is an efficient investment for retail investors who, for a small investment amount can benefit from professional investment management. Compared to other investment outlets, it offers a lower investment risk through asset diversification, inherently limited to marketable and tradable assets only. It is cost efficient for the retail investor because of minimal investment requirements. A professional fund manager safeguards your investments. Furthermore, all assets of the UITF are under separate custodianship with a BSP-accredited third party securities custodian. Q. How will the UITF benefit individual investors? A. The UITF features clearer safeguards to distinguish it from deposit products or substitutes. It is not subject to reserve requirements thus the earnings potential of investible funds is maximized. To ensure proper market valuation of the fund at all times, the UITF may only invest in securities that have an active market with transparent pricing. The UITF is prohibited from directly extending traditional loans and investing into real estate or other illiquid investments. Q. What currency is accepted in the UITF? A. East West Bank accepts investments in pesos or US dollars for its UITF. Q. How much is the minimum investment amount? A. For Peso Trust Maximizer UITF, the minimum investment is P10,000.00. For Dollar Trust Maximizer UITF, the minimum investment is US$2,000. Q. Can additional investments less than P10,000 or US$2,000 be accepted in the UITF? A. Yes, provided the amount is added to an existing placement and the minimum holding period has already been met. However, if the client wants a separate certificate to cover the additional investment, the required minimum investment amount has to be complied with. Q. What are the acceptable modes of investment in the Dollar Trust Maximizer UITF? A. EWB accept the following modes of investment:
Q. What is the investment term of the UITF? A. Investment in the UITF has no prescribed term but a minimum holding period of 30 calendar days is required. After the required holding period, the client's investment will continue until actual withdrawal. However, to fully appreciate the earnings potential of the UITF, the investor must be ready to place the investment over a longer period of time, possibly a year at the minimum. Q. What are the investment outlets for EWB Trust Maximizer UITFs? A. The BSP and the EWB Board of Directors allow UITFs to be invested in the following:
Q. When can I withdraw my investment? A. You may withdraw your UITF investment after the required holding period has been met and you have given a one-day prior notice and surrendered the Certificate of Participation to your depository branch. Your investment proceeds will be paid out on the next banking day, based on your preferred mode of payment. Q. Are partial withdrawals allowed in the UITF? A. No. All withdrawals per COP are computed on full basis. Should you want to withdraw only a portion of your proceeds, the amount not withdrawn will be reinvested and a new COP will be issued. However, all reinvestments should conform to the minimum investment amount required. Q. Can I withdraw earlier than the holding period? A. Yes, but subject to an early withdrawal charge. A one-day prior notice and surrender of Certificate will still be required for pretermination. Your investment proceeds will be computed based on:
Q. If redemption has a one-day notice, will the 12:00 noon cut-off still be observed? A. Yes, the 12:00 noon cut-off will still apply. Q. What is the most significant change in line with the UITF? A. For investors in the UITF, the most significant change is the valuation of the funds assets that will be strictly market-determined based on the daily mark-to-market valuation. Also, the BSP has limited the allowable investment outlets of the UITFs to strictly tradable and marketable securities. Q. What is meant by "mark-to-market" valuation? A. Mark-to-market is an internationally accepted investment valuation method whereby the fund's assets are valued on their most recent market prices. It differs from the traditional "accrual valuation" method that the CTFs have been using, which only considers the accrual of interest earnings of its principal investments. Under the mark-to-market valuation, the Net Asset Value per unit (NAVPU) of the UITF reflects the market value of each of the Fund's investment security, thus, providing the UITF participant an actual value of his investment at any banking day. Q. What are the benefits of mark-to-market valuation? A. The mark-to-market valuation provides more investment initiative and active fund management for the Trust Department. The fund manager can take advantage of available trading opportunities. Under this kind of valuation, the UIT investor has the opportunity for capital gains which is not available under the traditional accrual method of investment valuation. Q. When is the mark-to-market valuation of UITF assets done? A. Mark-to-market valuation of UITF assets are done on a daily basis and based on the most recent closing prices of the securities. Q. How will the NAVPU be computed in the UITF? A. The NAVPU of the UITF is computed by adding the fund's assets less liabilities, as follows:
NAVPU = Net Asset Value divided by outstanding units of the UITF Q. Will a new document be issued once the shift to the UITF is implemented? A. Yes, a new Certificate of Participation will be issued when the CTF investment is converted to the UITF, based on these cut-off dates: Peso Trust Maximizer : February 18, 2005 The maturity value of outstanding CTF investments as of said dates will serve as the new principal investments under the UITFs. The new certificates will be subject anew to the required holding period. Q. How will my market value / maturity proceeds of my UITF investment be computed? A. The proceeds of your UITF investment will be computed based on: Q. Are my investments in the UITF safe? A. As in any form of investment, prospective investors should carefully consider the risk factors before making an investment decision. These risks include the yield on investment not being guaranteed, credit and price risks because of mark-to-market valuation, and there is no guarantee that the investment strategies of the fund manager will work at all times. However, investors are guaranteed that their investments would NOT be lost in case of factors adversely affecting the performance of the financial institution since it carries risks separate from the Bank-proper. Q. Am I protected with PDIC Insurance? A. No. The UITF is not a deposit product so investments are not covered with PDIC insurance. Q. Can UITF be used as collateral for cash secured/ back-to-back loan? A. No, investments in the UITF cannot be accepted as collateral for cash secured/ back-to-back loan, primarily because of the daily mark-to-market valuation that the UITF investments are subject to. Q. How can an investor assess the performance of the UITF? A. EWB will provide historical year-on-year Return On Investment (ROI) and year-to-date ROI of the UITFs to inform clients of their funds' performance. The Y-O-Y yields refer to the actual return of the fund using the NAVPU recorded a year ago. The Y-T-D yields refer to the current return of the fund computed on an absolute percentage basis and not annualized to eliminate the effect of projecting future yields. Other than the historical rates, EWB will issue quarterly UITF updates which will include information on the UITF financial performance and portfolio mix. These updates will be posted at all EWB branches and our official website at ww.eastwestbanker.com. Q. Is the UITF similar to the Mutual Fund? A. They are similar only because both are investment vehicles through which clients' funds are pooled or commingled together for investment purposes. However, they differ in legal/ regulatory context. The UITF is created by virtue of a Declaration of Trust executed by a bank with a Trust license. Its fund management & operations are supervised by the Bangko Sentral ng Pilipinas. The UITF clients get participating units of investment for their placements. On the other hand, a Mutual Fund has a corporate existence. It is a legal entity that makes investments on behalf of their shareholders and is regulated by the Securities and Exchange Commission. Clients of a mutual fund effectively invest in shares of stocks of the fund. Normally, a mutual fund charges entry and exit fees for clients' investments while a UITF charges a fixed trust fee per annum to its investors. Questions? Please contact East West Bank Trust Department at |
 |
|
 |
|
 |
|
|
Home •
Privacy Statement •
Terms of Use •
Search EastWestBanker.com •
Site Map •
Send Feedback
Copyright © 2000 - 2008 EastWest Banking Corporation. A subsidiary of the Filinvest Group. Member PDIC and BancNet. All Rights Reserved. XHTML • CSS |
|
EastWestBanker.com is a Verisign Secure Site. About SSL Certificates |