How Much Can You Earn In Investing In UITF
Unit investment trust fund or UITF is a one of the many ways any Pinoy can actually invest to earn passive income. It is offered by banks and trust companies with most of them offering online access, making them really easy to open and manage.
But how much can you expect to earn?
This a question that might be on your mind. And it makes sense to ask it. After all, you’re into investing because you’re expecting to gain from it.
In this article, I’m going to discuss the factors that affect your return on investment and a forecast of potential earnings.
UITF risk and return
The first thing that needs to be considered is the type of fund. Different funds have different goals, and this is translated to the securities that they acquire and hold to create value for investors.
And securities are not created the same. Some of them are risky, some are considered less so. Some may historically posted high returns, and others may be give modest returns.
See below the table of different fund types and their risk-return profile.
| RISK | RETURN | |
|---|---|---|
| Index funds | High | High |
| Equities funds | High | High |
| Balanced funds | Moderate | Moderate |
| Bond funds | Conservative | Modest |
| Money market funds | Conservative | Modest |
As you can see, both risk and return mirror each other. The higher the risk, the higher the potential return.
Unlike mutual funds, there are no sales load for UITFs so that’s a plus. But there are other charges and fees that you may need to consider.
Other factors that may also affect your potential gain from your investment are the following.
- charges and fees
- non-guaranteed returns
Effect of management fees on UITF earnings
For instance, most UITFs actually have management fee. It represents a portion of the entire value of the fund, and it is used to pay for the operation and management of the fund.
You don’t have to pay this out of pocket though, and it is computed into the net asset value per unit.
See below the list of UITFs with management fee. As you can see, it ranges from 0.15% to 2.5%.
| FUND NAME | TYPE | MANAGEMENT FEE |
|---|---|---|
| AB CAPITAL BALANCED FUND | Balanced | 1.25% |
| ATRAM Global Multi-Asset Income Feeder Fund (PHP Unit Class) | Balanced | 0.95% |
| ATRAM US Multi-Asset Income Feeder Fund (PHP Unit Class) | Balanced | 0.95% |
| BDO PESO BALANCED FUND | Balanced | 1.00% p.a. |
| BPI Balanced Fund | Balanced | 1.50% p.a. |
| Odyssey Diversified Capital Fund | Balanced | 1.50% p.a. |
| Odyssey Diversified Balanced Fund | Balanced | 1.50% p.a. |
| BPI Bayanihan Balanced Fund | Balanced | 0.30% p.a. |
| CHINA BANK BALANCED FUND | Balanced | 1.0% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day |
| CTBC Bank – ATRAM Philippine Balanced Feeder Fund | Balanced | 1.00% |
| Peso Investment Trust Fund | Bond | 1.25% per annum based on the Net Asset Value (NAV) |
| ATRAM Total Return Peso Bond Fund | Bond | 1.10% p.a. |
| ATRAM Global Bond Income Feeder Fund | Bond | 0.65% p.a. |
| DIVERSITY PESO BOND FUND | Bond | 1% p.a. based on the Net Asset Value (NAV) accrued daily |
| BDO MERIT FUND MEDIUM TERM PORTFOLIO | Bond | 0.825% p.a. |
| BDO GS FUND | Bond | 1.00% p.a. |
| BDO MERIT FUND INTERMEDIATE TERM PORTFOLIO | Bond | 0.825% p.a. |
| BDO PESO BOND FUND | Bond | 1.00% p.a. |
| BDO PERA BOND INDEX FUND | Bond | 1.00% p.a. |
| BPI Premium Bond Fund | Bond | 1.50% p.a. |
| ABF Philippines Bond Index Fund | Bond | 0.080% p.a. Trust Fee / 0.186% p.a. Management and Advisory Fee |
| Odyssey Peso Medium Term Bond Fund | Bond | 1.00% p.a. |
| Odyssey Peso Bond Fund | Bond | 1.00% p.a. |
| Odyssey Tax-Exempt Peso Fixed Income Fund | Bond | 1.00% p.a. |
| BPI Fixed Income Portfolio Fund-of-Funds | Bond | None: trust fees are collected at the Target Fund level. |
| CHINA BANK FIXED INCOME FUND (formerly CBC GS FUND) | Bond | 0.75% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day |
| CHINA BANK INTERMEDIATE FIXED-INCOME FUND | Bond | 0.50% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day |
| EastWest Peso Long Term Bond Fund | Bond | 1.0% p.a. of the market value of the fund |
| EastWest Peso Intermediate Term Bond Fund | Bond | 1% p.a. of the market value of the fund |
| LANDBANK Bond Fund | Bond | 1.00% |
| AB CAPITAL EQUITY FUND | Equity | 1.25% PA |
| Equity Investment Trust Fund | Equity | 1.25% per annum based on the Net Asset Value (NAV) |
| ATRAM Global Dividend Feeder Fund | Equity | 0.90% p.a. |
| ATRAM Asia Equity Opportunity Feeder Fund | Equity | 0.95% p.a. |
| ATRAM Global Technology Feeder Fund | Equity | 0.95% |
| ATRAM Global Financials Feeder Fund | Equity | 0.90% p.a. |
| DIVERSITY DIVIDEND FOCUSED FUND | Equity | 1.50% p.a. based on the Net Asset Value (NAV) accrued daily |
| BDO INSTITUTIONAL EQUITY FUND | Equity | 1.00% p.a. |
| BDO EQUITY FUND | Equity | 1.00% p.a. |
| BDO SUSTAINABLE DIVIDEND FUND | Equity | 1.25% p.a. |
| BDO FOCUSED EQUITY FUND | Equity | 1.50% p.a. |
| BDO ESG EQUITY FUND | Equity | 1.00% p.a. |
| BPI Equity Value Fund | Equity | 1.50% p.a. |
| Odyssey Philippine Equity Fund | Equity | 2.00% p.a. |
| Odyssey High Conviction Equity Fund | Equity | 2.50% p.a. |
| BPI Philippine High Dividend Equity Fund | Equity | 1.50% p.a. |
| BPI Philippine Infrastructure Equity Index Fund | Equity | 1.00% p.a. |
| BPI Philippine Consumer Equity Index Fund | Equity | 1.00% p.a. |
| BPI Catholic Values Global Equity Feeder Fund | Equity | 0.50% p.a. |
| CHINA BANK EQUITY FUND | Equity | 1.0% based on NAV before trust fee for the day |
| CHINA BANK HIGH DIVIDEND EQUITY FUND | Equity | 1.0% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day |
| EastWest PhilEquity Feeder Fund | Equity | 1.00% per annum |
| EastWest PhilEquity Institutional Feeder Fund | Equity | Fee is charged at the portfolio level |
| ATRAM Philippine Equity Smart Index Fund | Equity | 1.50% p.a. |
| BDO EQUITY INDEX FUND | Index | 1.00% p.a. |
| BDO PERA EQUITY INDEX FUND | Index | 1.00% p.a. |
| BPI Philippine Equity Index Fund | Index | 1.00% p.a. |
| CTBC Bank – Sun Life Philippine Stock Index Feeder Fund | Index | 1.00% |
| EastWest PSEI Tracker Fund | Index | 0.75% p.a of the market value of the fund |
| AB CAPITAL SHORT-TERM FUND | Money Market | 0.375% p.a. |
| Peso Money Market Fund | Money Market | 0.30% per annum based on the Net Asset Value (NAV) |
| ATRAM Peso Money Market Fund | Money Market | 0.50% p.a. |
| DIVERSITY MONEY MARKET FUND | Money Market | 0.25% p.a. |
| BDO INSTITUTIONAL CASH RESERVE FUND | Money Market | None |
| BDO PESO MONEY MARKET FUND | Money Market | 0.50% p.a. |
| BDO PERA SHORT TERM FUND | Money Market | 0.50% p.a. |
| BDO SHORT TERM FUND | Money Market | 0.25% p.a. |
| BPI Short Term Fund | Money Market | 0.50% p.a. |
| BPI Money Market Fund | Money Market | 0.25% p.a. |
| CHINA BANK MONEY MARKET FUND | Money Market | 0.25% per annum based on the Net Asset Value (NAV) of the Fund before trust fee for the day |
| CHINA BANK CASH FUND (formerly CBC INSTITUTIONAL MMF) | Money Market | 0.15%p.a. based on the Net Asset Value (NAV) of the Fund before trust fee for the day |
| CHINA BANK SHORT-TERM FUND | Money Market | 0.25% per annum based on the Net Asset Value (ANV) of the Fund before trust fee for the day |
| CTBC Money Market Fund | Money Market | 0.25% |
| UNLAD KAWANI MONEY MARKET FUND | Money Market | 0.05% p.a. |
| CLASS I – UNLAD PANIMULA MM FUND | Money Market | .15% p.a. |
| CLASS II – UNLAD PANIMULA MM FUND | Money Market | .25% p.a. |
| CLASS III – UNLAD PANIMULA MM FUND | Money Market | .30% p.a. |
| EastWest Peso Money Market Fund | Money Market | 0.25% p.a. of the market value of the fund |
| East West Peso Short Term Fund | Money Market | 0.25% p.a of the market value of the fund |
But how does it actually affect your earnings? The higher the fee, the lower what you can expect to get from your investment.
In fact, we can make a comparison between different values of this fee. This way, you can get a better picture of how it impacts the growth of money over time.
The table below shows a projection of various funds with 0%, 0.15%, 1% and 2.50% fee with the following assumptions.
- Time horizon is 30 years.
- Initial 10,000 and monthly 1,000 investment.
- The projection grows 10% compounded yearly rate.
| YEAR | DEPOSIT | ZERO-FEE | 0.15% | 1% | 2.50% |
|---|---|---|---|---|---|
| 1 | 22,000 | 23,670 | 23,635 | 23,434 | 23,079 |
| 2 | 34,000 | 38,767 | 38,611 | 38,063 | 37,105 |
| 3 | 46,000 | 55,440 | 55,059 | 53,994 | 52,951 |
| 4 | 58,000 | 73,853 | 73,125 | 71,343 | 70,207 |
| 5 | 70,000 | 94,187 | 92,969 | 90,236 | 88,999 |
| 10 | 130,000 | 232,489 | 225,591 | 213,124 | 211,230 |
| 15 | 190,000 | 459,697 | 437,584 | 401,336 | 398,436 |
| 20 | 250,000 | 832,972 | 776,448 | 689,599 | 685,156 |
| 25 | 310,000 | 1,446,237 | 1,318,111 | 1,131,095 | 1,124,291 |
| 30 | 370,000 | 2,453,819 | 2,183,942 | 1,807,281 | 1,796,860 |
So over 30 years, you’ve saved P370,000 and with 10% yearly growth rate, you would have earned P2,453,819 if the fund has no fees.
And as the fees go higher, the lesser returns that you can possibly get.
The effect of exit fee on UITF earnings
Another charge that you have to be careful is the exit fee. It is a fee that is assessed in your account if you fail to hold on to your investment longer than the holding period.
The holding period is the shortest period of time that you are expected to let your investment be held with the fund. If you withdraw your money by redeeming units before the holding period is up, then the exit fee would be applicable.
See the table below for a summary funds, their holding period, and exit fee.
| FUND NAME | TYPE | HOLD | EXIT |
|---|---|---|---|
| AB CAPITAL BALANCED FUND | Balanced | 30 calendar | 1.00% of the Principal |
| ATRAM Global Multi-Asset Income Feeder Fund (PHP Unit Class) | Balanced | 0 calendar | none |
| ATRAM US Multi-Asset Income Feeder Fund (PHP Unit Class) | Balanced | 0 calendar | none |
| BDO PESO BALANCED FUND | Balanced | 30 calendar | 0.50% of the Original Participation Amount |
| BPI Balanced Fund | Balanced | 0 calendar | None |
| Odyssey Diversified Capital Fund | Balanced | 0 calendar | None |
| Odyssey Diversified Balanced Fund | Balanced | 0 calendar | None |
| BPI Bayanihan Balanced Fund | Balanced | 0 calendar | None |
| CHINA BANK BALANCED FUND | Balanced | 30 calendar | 1.0% of the amount redeemed |
| CTBC Bank – ATRAM Philippine Balanced Feeder Fund | Balanced | 30 calendar | 0.50% |
| Peso Investment Trust Fund | Bond | 30 calendar | 0.50% of amount redeemed |
| ATRAM Total Return Peso Bond Fund | Bond | 30 calendar | 1% of amount redeemed |
| ATRAM Global Bond Income Feeder Fund | Bond | 0 calendar | none |
| DIVERSITY PESO BOND FUND | Bond | 30 calendar | 5% of the redeemed amount |
| BDO MERIT FUND MEDIUM TERM PORTFOLIO | Bond | 0 calendar | None |
| BDO GS FUND | Bond | 30 calendar | 0.50% of the Original Participation Amount |
| BDO MERIT FUND INTERMEDIATE TERM PORTFOLIO | Bond | 0 calendar | None |
| BDO PESO BOND FUND | Bond | 30 calendar | 0.50% of the Original Participation Amount |
| BDO PERA BOND INDEX FUND | Bond | 30 calendar | 1.00% of original participation amount |
| BPI Premium Bond Fund | Bond | 0 calendar | None |
| ABF Philippines Bond Index Fund | Bond | 0 calendar | None |
| Odyssey Peso Medium Term Bond Fund | Bond | 0 calendar | None |
| Odyssey Peso Bond Fund | Bond | 0 calendar | None |
| Odyssey Tax-Exempt Peso Fixed Income Fund | Bond | 0 calendar | None |
| BPI Fixed Income Portfolio Fund-of-Funds | Bond | 0 calendar | None |
| CHINA BANK FIXED INCOME FUND (formerly CBC GS FUND) | Bond | 30 calendar | 1.0% of the amount redeemed |
| CHINA BANK INTERMEDIATE FIXED-INCOME FUND | Bond | 30 calendar | 1.0% of the amount redeemed |
| EastWest Peso Long Term Bond Fund | Bond | 180 calendar | PHP 500.00 or 0.25% of the withdrawn amount, whichever is higher |
| EastWest Peso Intermediate Term Bond Fund | Bond | 30 calendar | PHP 500.00 or 0.25% of the withdrawn amount, whichever is higher |
| LANDBANK Bond Fund | Bond | 30 calendar | 25% of net earnings (P500 minimum) |
| AB CAPITAL EQUITY FUND | Equity | 30 calendar | 1.00% of the Principal |
| Equity Investment Trust Fund | Equity | 30 calendar | 0.50% of amount redeemed |
| ATRAM Global Dividend Feeder Fund | Equity | 0 calendar | none |
| ATRAM Asia Equity Opportunity Feeder Fund | Equity | 0 calendar | none |
| ATRAM Global Technology Feeder Fund | Equity | 0 calendar | none |
| ATRAM Global Financials Feeder Fund | Equity | 0 calendar | none |
| DIVERSITY DIVIDEND FOCUSED FUND | Equity | 30 calendar | 5% of the redeemed amount |
| BDO INSTITUTIONAL EQUITY FUND | Equity | 30 calendar | 0.50% of the Original Participation Amount |
| BDO EQUITY FUND | Equity | 30 calendar | 1.00% of the Original Participation Amount |
| BDO SUSTAINABLE DIVIDEND FUND | Equity | 30 calendar | 1.00% of the Original Participation Amount |
| BDO FOCUSED EQUITY FUND | Equity | 30 calendar | 1.00% of the Original Participation Amount |
| BDO ESG EQUITY FUND | Equity | 30 calendar | 1.00% of the Original Participation Amount |
| BPI Equity Value Fund | Equity | 0 calendar | None |
| Odyssey Philippine Equity Fund | Equity | 0 calendar | None |
| Odyssey High Conviction Equity Fund | Equity | 0 calendar | None |
| BPI Philippine High Dividend Equity Fund | Equity | 0 calendar | None |
| BPI Philippine Infrastructure Equity Index Fund | Equity | 0 calendar | None |
| BPI Philippine Consumer Equity Index Fund | Equity | 0 calendar | None |
| BPI Catholic Values Global Equity Feeder Fund | Equity | 0 calendar | None |
| CHINA BANK EQUITY FUND | Equity | 30 calendar | 1.0% of redemption proceeds |
| CHINA BANK HIGH DIVIDEND EQUITY FUND | Equity | 30 calendar | 1.0% of the amount redeemed |
| EastWest PhilEquity Feeder Fund | Equity | 30 calendar | PHP500 or 0.25% of the redemption proceeds whichever is higher |
| EastWest PhilEquity Institutional Feeder Fund | Equity | 0 calendar | 0 |
| ATRAM Philippine Equity Smart Index Fund | Equity | 0 calendar | none |
| BDO EQUITY INDEX FUND | Index | 30 calendar | 0.50% of the Original Participation Amount |
| BDO PERA EQUITY INDEX FUND | Index | 30 calendar | 1.00% of the Original Participation Amount |
| BPI Philippine Equity Index Fund | Index | 0 calendar | None |
| CTBC Bank – Sun Life Philippine Stock Index Feeder Fund | Index | 30 calendar | 1.00% |
| EastWest PSEI Tracker Fund | Index | 30 calendar | P500.00 or 0.25% of redemption proceeds, whichever is higher |
| AB CAPITAL SHORT-TERM FUND | Money Market | 0 calendar | NONE |
| Peso Money Market Fund | Money Market | 30 calendar | 0.5% of amount redeemed |
| ATRAM Peso Money Market Fund | Money Market | 0 banking | None |
| DIVERSITY MONEY MARKET FUND | Money Market | 30 calendar | 5% of the redeemed amount |
| BDO INSTITUTIONAL CASH RESERVE FUND | Money Market | 0 calendar | None |
| BDO PESO MONEY MARKET FUND | Money Market | 0 calendar | None |
| BDO PERA SHORT TERM FUND | Money Market | 30 calendar | 0.50% of the Original Participation Amount |
| BDO SHORT TERM FUND | Money Market | 0 calendar | None |
| BPI Short Term Fund | Money Market | 0 calendar | None |
| BPI Money Market Fund | Money Market | 0 calendar | None |
| CHINA BANK MONEY MARKET FUND | Money Market | 3 banking | 1.0% of the amount redeemed |
| CHINA BANK CASH FUND (formerly CBC INSTITUTIONAL MMF) | Money Market | 3 banking | 1.0% of the amount redeemed |
| CHINA BANK SHORT-TERM FUND | Money Market | 3 banking | 1.0% of the amount redeemed |
| CTBC Money Market Fund | Money Market | 30 calendar | 0.50% |
| UNLAD KAWANI MONEY MARKET FUND | Money Market | 0 calendar | None |
| CLASS I – UNLAD PANIMULA MM FUND | Money Market | 0 calendar | None |
| CLASS II – UNLAD PANIMULA MM FUND | Money Market | 0 calendar | None |
| CLASS III – UNLAD PANIMULA MM FUND | Money Market | 0 calendar | None |
| EastWest Peso Money Market Fund | Money Market | 0 calendar | None |
| East West Peso Short Term Fund | Money Market | 0 calendar | Not applicable |
UITF earnings with non-guaranteed returns
Lastly, your earnings from any UITF are non-guaranteed. They vary and are not insured at all, and that means that you enjoy all the gains and absorb any loss.
And that’s why that I am not going to use any past data to make forecast into the future. No past performance is going to actually predict any future earnings that you’re going to get.
But if you are so inclined, you may visit UITF PH website, which is maintained by the Trust Officers Association of the Philippines.
Instead, what could be done is to make a forecast using varying rate of returns. In the table below, the following assumptions are:
- Management fee is not computed as it is assumed NAVPU would already reflect this value.
- Initial 10,000 and monthly 1,000 investment.
- Time horizon is 30 years.
| YEAR | DEPOSIT | 4% | 8% | 12% |
|---|---|---|---|---|
| 1 | 22,000 | 22,663 | 23,333 | 24,009 |
| 2 | 34,000 | 35,833 | 37,732 | 39,700 |
| 3 | 46,000 | 49,529 | 53,284 | 57,273 |
| 4 | 58,000 | 63,774 | 70,080 | 76,955 |
| 5 | 70,000 | 78,588 | 88,219 | 98,999 |
| 10 | 130,000 | 162,036 | 203,148 | 255,846 |
| 15 | 190,000 | 263,563 | 372,017 | 532,264 |
| 20 | 250,000 | 387,086 | 620,141 | 1,019,406 |
| 25 | 310,000 | 537,371 | 984,716 | 1,877,918 |
| 30 | 370,000 | 720,215 | 1,520,397 | 3,390,909 |
Summary
1. Choose a fund that suits your risk-return profile. Just because a fund is rated with high potential for growth does not mean that it is a best fit for you.
2. Choose a fund that has the least management fee. It’s going to help you in the long run.
3. To avoid paying the exit fee, you can choose to withdraw at the end of the holding period or choose a fund that does not have any holding period at all.
4. Your UITF earnings are non-guaranteed. The way that you can estimate how much you’re going to get in the future is to actually see the forecast under different earnings scenario.
This way, you get to have a picture of how your money is going to grow over time.