Mutual Fund vs UITF – Similarities and Differences: Advantages and Disadvantages

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What’s the difference between a mutual fund and UITF? Which is better – investing in UITF or investing in Mutual Fund? Because many readers were asking about mutual fund vs UITF from my previous posts about stock market and trust funds, I’m sharing here the similarities and differences of the two together with the advantages and disadvantages. I’d like to thank all Philpaddicts for always reading and commenting. I hope you love this post and may it inspire you to enjoy investing. I’m dedicating it to all of you.

mutual fund vs uitf
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Mutual Fund vs UITF

A mutual fund is a type of investment wherein you join other investors and corporations to form a massive fund which will be handled by an expert/professional who is called fund manager for diversified portfolios of stocks, bonds, securities, money markets and other mutual funds. In MF, you buy shares of the investment company thus that makes you a shareholder and gives you shareholder’s right including voting power and opportunity to receive dividends.

UITF (Unit Investment Trust Fund) is also a type of investment where you join other investors and entities to form a Trust Fund which will be handled by Trust expert/professional for diversified portfolios of stocks, bonds, securities, money markets and other funds. In UITFs, you buy units of investment in the fund thus you will earn from the gain or loss resulting from the fund performance. Unlike MF, it won’t make you shareholder of the company.

Similarities of Mutual Fund and UITF:

  • Both funds are pooled and open-ended investments meaning they are pooled by different kinds of funds, people and companies to be invested and diversified to other investments like stocks, bonds, securities, money market and other mutual funds and trust funds. They are open-ended investments meaning you can buy or redeem anytime you want.
  • Both funds are managed by fund managers who are already experts about investment fund growth, strategies and meeting target performance.
  • Both fund investments are risky in nature however they can give you higher returns and can yield amazing money and capital growth.
  • Mutual Funds and UITFs usually offer the following types of funds and investments:
  1. Money Market Funds –moderate risk; short term
  2. Bond Funds – moderate risk; long term
  3. Equity Funds – aggressive; long term
  4. Balanced Funds – aggressive; long term
  • Both funds are not insured by the PDIC because they are not deposit accounts

Differences between Mutual Fund vs UITF

How to invest:

Mutual Fund – you can open an account by talking to a licensed mutual fund agent first so you’ll know the different types of MF available for you according to your risk tolerance (risk appetite), capacity to invest and your investment goal. See the list of Mutual Funds Companies in the Philippines accredited by SEC.

UITF – you can open an account by talking to a Trust representative of a bank. Banks usually have special representatives (not tellers) for Trust Investments and related products. If you can’t find one at the bank, talk to the bank manager. They will always be glad to assist you.

Regulatory Body:

Mutual Funds – are regulated by SEC (Securities and Exchange Commission)

UITFs – are regulated by the BSP (Bangko Sentral ng Pilipinas)

Minimum Investment

Mutual Fund – the minimum amount I know so far is P5000. Take note that some MF have different minimum amount requirements since there are different funds.

UITF – the minimum amount for UITF like Equity Fund and Balanced Fund is usually P10,000. For other UITFs, the usual minimum investment is P100,000.

Holding Period:

Mutual Fund – majority of mutual funds has 6 months minimum holding period although there are only few which have 30-day holding period.

UITF – majority has 30 days of minimum holding period and also 45 days to some.

Price of Funds:

Mutual Fund – in mutual funds, you buy shares in the investment company therefore prices are expressed and reported in NAVPS (Net Asset Value Per share)

UITF – in UITF, you buy units of participation in the Trust Fund therefore prices are expressed and reported in NAVPU (Net Asset Value Per Unit)

Fees and Charges:

Mutual Fund – there may be entry fees around .50% – 5.00% and management fees associated with this investment

UITF – no entry fees but with trust fee ranges from .50% to 1.00% per annum, there can also be redemption fees especially if you redeem your fund before the holding period

Advantages of Investing in Mutual Funds:

  • They are usually more and well regulated since companies really focused on their funds and their performance. Reports are more transparent since shareholders need to know fund performance, reporting, portfolios, dividends etc.
  • May give the investors dividends and other shareholder’s rights
  • Tax exempt in terms of Capital Gains

Disadvantages of Investing in Mutual Funds:

  • They charge entry fees and management fees
  • MF companies are not so easy to find like banks where branches are almost everywhere

Advantages of Investing in UITF:

  • Easy access because you can open an account in any branch of the bank near you
  • They offer wide variety of funds you can choose from
  • No entry fees and costly management fees

Disadvantage of investing in UITF:

  • It won’t make the investors part of the company and won’t give shareholder’s rights

Which is better Mutual Fund or UITF?

Mutual Funds and UITF are both effective and well proven ways of money and wealth building. This is so true according to the rich and wise investors. Nothing is better than the other if you asked me. Both funds are kinda similar in nature but can give you thousands or millions of money if invested correctly by checking each fund’s performance and investment participation.

Mutual fund vs UITF? They are both risky yet they both could give you higher returns compared to just letting your money or fund rest in your vault or savings account. This I am absolutely sure of:

If you have mutual funds and UITF, you belong to the very few wise investors in the world.”

To learn more about Mutual Fund vs UITF, read our previous posts:

How to invest in Mutual Funds in the Philippines – Make Money, make Millions

Investing in BDO UITF Equity Fund Review

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Fehl is the founder of Philpad and has been writing online for 12 years. She has a bachelor's degree in Accountancy and a background in Finance. She is a licensed Career Service Professional and author of a poetry book at Barnes & Noble. In her spare time, she likes to travel and discover new places.

51 thoughts on “Mutual Fund vs UITF – Similarities and Differences: Advantages and Disadvantages”

  1. Hi ms. Fehl! Im ur follower working as seafarer in cruise ship. I hve stocks in COL and (partly) using ur magic 10 strategy and one of my goal is to put up an ITF for my duaghter tru COL but as of this time wla p ata sila UITF, now my question po is regarding fund managers who hndle this kind of investments. Do we have the right to meet this people in person?

    Ps: me and wife really learn a lot from your site. Dami nyo po natutulungan dahil dito. Godbless!!!

    • Hi, Jon. UITF are offered by banks. You can open one at major banks. Fund managers are based at a bank’s head office usually at the Trust Department. If you want to meet some, you go there. 🙂 Thank you very much for the kind words.

  2. hello

    ask ko lang ang opinion nyo about balance investment..nbabasa ko kse they tell percentages of stocks,mf and uitf..and other invstmnt intruments to have balance investment..how about yours maam?..thanks

  3. Hi I am an OFW. Which is one is better BDO or BPI? in terms of platform… sorry for the newbie question.

    e.g.
    – easy participation and redemption
    – transfer of funds from savings account to investment account through online
    – hassle free (just go to the bank during account opening, then everything online)

  5. Hi Ms. Fehl,

    Thank you for the information you share in your website. I just got interested in investing my money recently. I am a nurse OFW sa middle east. And honestly, I just started reading and browsing today. Medyo naiintindihan ko na siya kahit papaano; about investing in stocks through online and live brokers, and itong UITF and MF. However, forgive me for asking this. Kapag ako ba me broker na like BPI, can I use this brokers to buy UITFs and MFs ?or totally ibang platform and stock buying thru a broker and investing in UITFs and MFs. Senxa na, if my question sounds stupid. I will do my assignment and read on. Nagmamadali lang kasi ako to make a decision because I will going back to the middle east and I may not have a chance even to start. Thank you.

    • Hi Jepoy. You only need stockbroker if you want to invest on stocks directly in the PSE. You don’t need a broker sa UITF and MF as of this writing.

  6. Good morning Ms. Fehl,

    I-confirm ko lang po. In UITF, it is not allowed to add money or capital on initial investment, wherein you need to redeem all and reinvest with your desired capital amount. In MF, it is allowed to add money with no limitations and restrictions even without redemption.

    So mas ok pala ang MF compare sa UITF. Kasi pag nakikita mong gumaganda ang market or NAVPS, pwede mo dagdagan ang pera mo as capital investment.

    Tama ba? Salamat po.

    • Hi, actually you can also add up funds in your UITF regularly just like on MF. Some banks have UITF products like that like BDO EIP (Easy Investment Plan) and PNB AIP (Auto Invest Plan). We have reviews about those products here in Philpad too.

      • Wala po akong online, savings or kahit na anong account sa BDO. My SDF is one time investment. Kung gusto kong dagdagan ang initial kong 10k for example, need ko iredeem DAW lahat then open another SDF with 20k initial capital. Sa MF daw po pwede? minimum of 5k, then pwede kahit tag isang libong dagdag anytime kung sa tingin mo ay maganda at tataas pa ang NAVPS. Comments mo po. Salamat again.

        • Regular UITF kasi ang inopen mo. If you want to add up funds periodically, you need to open BDO EIP (Easy Investment Plan) for your UITF

  7. hi! thanks for your posts. It gave me insights. I am 29 and an ofw and am thinking of putting some of my earnnings in investments. A couple years ago, i went to BDO to inquire about their EIP. The teller said, its too risky and so she refered me to a Financial Advisor selling an Insurance Policy. I really like to invest so I continued my readings And research to learn more about it and do some soul-searching with regards to my own risk tolerance. I would like to ask if is being an OFW matters in their background check as an investor? You know, im thinking maybe because we are working outside of the country. I am planning to have my vacation this April and will definitely pursue my goal to invest and earn in the long-term. 🙂

    • Hi. The usual problem when opening an investment is when the investor is not ware of the risks involved. If you have the funds, the goal, financial stability, and you know the risks, you’re good to open some investments. If they are hesitant to let you open investments, tell them you’re aware of the risks. Some funds are not available for non-residents so you must ask the banker about the products that you can invest with. God bless 🙂

  8. Gud day ms fehl,
    I wud just lyk to ask if it is required to add up money on a monthly basis for uitf accounts? If yes den how much is the minimum..thanks

  9. Miss Fehl,

    Kaylangan mo na tlga gumawa ng libro from basics to advanced. I need straight to the point answers na tlga regarding which investment piliin ko, pano at ano ang mga kaylangan ko malaman. confused na tlga kasi masyado. I earn 15k/month and have p100k+ as stagnant savings. I need to invest this money at most p50k in a way na mag generate siya income and I have plans to withdraw the earnings after 5 years. ano po ma suggest nyo Miss Fehl. Need advice talaga. If ok sa iyo pls reply po sa email para makita ko agad. Hoping for a favorable response po. Thank you. been reading your blogs since last night.

    • Hi! It depends upon you as an investor. If you are aggressive and can take risks, invest your funds on Equity Fund or invest them directly in the stock market. In experience, I find the latter more profitable 🙂 If you’re a newbie, investing them on Equity Funds from Mutual Fund like Sun Life and Philequity would be great.

  10. Hi Ms. Fehl,
    I’m planning to invest 100K in BDO Equity Fund and leave it there for 10 years so that I can build a business using the money I will earn if ever, but I’m anxious about the possible loss I may incur, how much do you think I can possibly lose with that investment?

    • I suggest you add up funds every month to that 100K so that you will earn more profit instead of investing a single placement of 100K at once 🙂

  11. I can see that some banks now offer mutual funds. You said in your post that most Mutual Funds are offered by MF companies, which are fewer than banks and thus a disadvantage to MF. Is applying in MF companies significantly better than applying in banks that offer MFs?
    Thanks! Btw, really helpful article.

    • Some Mutual Fund companies partner with banks for convenience. Doesn’t mean the banks own the Mutual Funds products. MF companies put MF representatives to some banks and financial hubs. Marketing strategy 🙂

  12. Hi Ms. Fehl,

    Follow up question. Security Bank is doing great in UITF and they have lower NAVPU compared to BDO and BPI. But BDO and BPI are more established than SB. Should I still invest in SB? Or BDO, BPI and PNB are much safer and better than SB in terms of equity? Thanks a lot.

    • Lower NAVPU doesn’t mean higher return. It’s more likely they have started few months/years ago than the ones with higher NAVPU. It doesn’t mean lower return either. The performance of the UITF is the basis at the end of the day 🙂 Nothing is safer coz they’re all investments and they are all aggressive. If I”m investing only now, I would choose SB. But I had already existing UITF and that’s ok to maintain them than kill them and transfer. 🙂 Will review about SB soon 🙂

  13. Hi Ms. Fehl,

    I am a fan of your blog. I have few questions regarding mutual funds. What does it mean to me if Mutual funds can give me dividends and rights? How can I benefit from those in layman’s terms? I am confused between Mutual Funds and UITF since UITFs don’t charge you anything especially in top ups. Thank you for your future response.

    • Hi Ava 🙂 You will earn dividends only when the Mutual Fund company issued them. Dividends are not big money usually. UITF and MF are almost the same if you notice and when you check their fund fact sheet. The allocation of investment, strategy and management are what differ. Choose either MF or UITF in Equity if you’re investing for long term.

  14. hello madam, gusto ko lang pong itanong kung paano mag apply ng uitf sa bdo kahit andito ako sa malayo.pwede q po bang magamit ang account q sa bdo?

  15. May uitf po ako sa bdo since dec 2012. ok lang po ba na hindi ko icheck yung navpu nya everyday? As in once ko palang kasi na check yun. Balak ko kunin ang pera after 3yrs. Or stay ko lang sya? Pls give advise. Salamat po.

  16. UITF vs. MF? (Almost all of the features have been mentioned except for this one):

    UITF – fixed amount of subscription per month (ex. P1,000/ 15th & 30th of the month);
    MF – minimum of P1,000/month or higher (ex. i subscribe more than P1k if I have extra money or if, the
    market is quite down- for me to be able to buy more shares).

    Hope this one will help a prospective investor…:)

    • I was looking for some guides on how to start saving money…I dont quite remember how I ended to this blog…but its really good,easy to understand..im amazed an ofw like me can afford to invest…so thank you.its never late to invest isn’t it?any suggestions where to start? Thanks much.

  17. Hi! I am investing MF in Petron Corp. Then I want to sell my share, but Petron Corp answered me once in my email while giving some requirements, such as current address, bank accounts, and Petron Corp standard forms for my personal information. Thence nothing happened. Please help my problem. God Bless…

    Jose

  18. hi fel as i read your blog, it really inspired me to invest both MF and UTIF
    i was just wondering which is best you can recommend.

    • If you want to invest stocks using UITF, choose Equity Fund. You can also use Peso Cost Averaging in UITFs

      • I suppose you are NEWBIE, it is better to invest in UITF Equity Fund coz it is similar in investing in stock market & “PAC” in a sense that you subscribed regularly. The good thing with UITF is that your money is invested in at least 10 Top Equities while in stocks your money could only buy 1,2 or 3 stocks portfolio. There is a saying “Do not put all your eggs in one basket.” Ex. I have 8 stocks in COL but only 3 stocks is in a green code while the remaining 5 is in red code or negative price appreciation (in total around -9%) while my BDO UITF gain 12-13%. for the same period. BUT, if you insist in investing in stock market you must follow investment guide or faithfully apply SAM of Bo Sanchez…(my 3 green stocks is in line with Bo’s recommendation while the other 5 is thru patronage/personal preference.)
        Happy Investing!

        • UITF in Equity is not purely similar to direct stock market investing since you have fund managers in UITF while on PSE, you’re in control. Your UITF Equity Fund investments are not purely invested on stocks, they are also involved on mix money instruments. 90% usually on equities and 10% mixed money instruments

  20. I’m planning to have UITF and mutual fund both having equity and balance fund then redeem it after 10years or more. For me not to feel burden with these,Im planning to invest 20,000 per year for each fund until I reach 100,000 investment for each account then I will just wait 10years before I redeem them. Is it ok or not?

    • I think it’s a smart strategy in my opinion because one account is aggressive while the other has moderate risk. I personally use similar move on my Equity Fund however different amount and I plan to not stop funding until 10 years and redeem them all. 🙂 That would be before my 40s. 🙂

      • Thank you very much for your reply 🙂 A very big help for a beginner like me.May I ask how much total funding per you would you recommend for an UITF Equity and balanced?Also,which of these funds is better to have higher funding? Is it better to have UITF Equity and balanced using EIP than funding them once a year? Also,using EIP can I fund each fund 2,000 or more per month? Can I exceed 10,000 using EIP for each fund?

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