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

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