Why Invest in UITFs

OFWs are always in search of a way to make their hard-earned money work for them. Instead of watching money pile up in a regular savings account and lose value over inflation, a lot of OFWs have started to invest in starting their own business and even the stock market. The risk of becoming an entrepreneur is high, there’s a lot of room for success, but a lot of room for failure as well. The stock market is always a popular investment; however, investing in the stock market of the Philippines while living abroad can be a drawback as the investor doesn’t see the growth of the companies they invest in aside from the fact work and time difference can be giant hurdles to overcome to conduct research on which stocks to invest in.


OFW Guru had a chat with an Applied Mathematics Graduate from the Ateneo de Manila University and is currently a researcher for one of the largest bank in the Philippines. She asked us “why not try a new financial product worth investing in, the Unit Investment Trust Fund?


A Unit Investment Trust Fund, or UITF, is not a very common financial term for most Pinoys; however, it is growing in popularity. A UITF is basically a pooled trust fun managed by a trust entity. One can easily participate by purchasing units of participation.


“What makes UITFs a better option for OFWs is that they can invest in a mix of equities, bonds and other financial instruments depending on their risk appetite,” our expert shares. The risk appetite being how much one is willing to gamble their money for massive growth or put it in danger.


Our expert gives her 4 major reasons to invest in UITFs


UITFs beat the Inflation rate


Inflation is the general rise in the level of cost of goods and services. The implication is that the purchasing power of money today will decrease due to the inflation rate. Inflation is a major reason why one may be losing money if left in a regular savings account, but investing in a UITF allows one’s money to grow faster than the inflation rate because interest rates of SDAs and TDs are lower than inflation.


UITFs are managed by Professionals


OFWs lead busy lives and their day is filled errands and work. They won’t have the time to regularly check the movement of stocks online and learn the ins and outs of equity investing. Investing in UITFs, on the other hand, grants them the ability to invest in funds that are already regulated and managed by professionals who can advise them on where to invest.


Investing in funds that match their Risk appetite


Financial Institutions often have numerous funds that a potential investor can put their money in depending on their appetite for risk. For someone with a large appetite for risk, they can invest in an Equity UITF where there is a big chance for growth and decline while for those with a small appetite for risk can invest in a money market UITF.


UITFs are regulated by the BSP


Compared to the regulations of the PSE, the BSP has better risk mitigation practices. The BSP has taken under itself the task to regulate banks on the quality of their risk management practices.


Check out our guide to investing in UITFs to be posted.