Mutual Funds Vs. UITFs
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Mutual Funds Vs. UITFs
They look the same, work the same, and often perform the same. But they’re not exactly the same. Mutual funds and unit investment trust funds are both pooled investments, i.e, they pool money from various investors – big institutional ones and small retail ones – and invest the money in diversified financial instruments based on their stated fund objectives. But there are some key differences that you need to know.
| Mutual Funds | Vs. | UITFs |
| An investment company and managed independently by a fund manager | Issued by | The trust or treasury department or group of a commercial bank |
| Common shares in the investment company | Instruments issued | Units of participation in the fund |
| Licensed mutual fund agents | Sold by | Authorized bank employees |
| Securities and Exchange Commission (SEC) | Regulated by | Bangko Sentral ng Pilipinas (BSP) |
| Net Asset Value Per Share (NAVPS) | Price expressed as | Net Asset Value Per Unit (NAVPU) |
| 1. 1%-5% sales charge 2. 0.5%-3% redemption fee 3. 1%-2.5% investment advisory, distributor and administration fees |
Charges | 1. 0%-2% sales charge 2. 1%-2% redemption fee 3. 1%-1.5% trust fees |
| 1. Longer track record 2. Greater regulation, required to submit regular reports and subject to full disclosure 3. Greater independence, with separate fund manager, independent custodian, and own board of directors 4. Greater transparency and accountability, with shareholder rights, licensed agents, prospectuses, and annual reports to investors 5. Tax-exempt |
Advantages | 1. Wider variety of options 2. No or lower sales charge 3. Lower management fees |
| 1. Higher expenses and therefore higher management fees 2. Fewer choices due to high capital requirements |
Disadvantages | 1. Less regulation and transparency 2. 20% withholding tax on capital gains |
kindly update this post. somehow there are wrong information mentioned here. As far as I know mutual funds require 5,000 capital only.2. Fewer choices due to high capital requirements
i agree to sweet that post is not updated although mutual funds has various type of this and different risk involved.
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20% with holding tax on capital gains? how”s that? why its too big? Please explain?