uitf questions
Unit Investment Trust Fund Frequently Asked Questions
Q. What is a Unit Investment trust Fund (UITF)?
A. A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in any acceptable currency. A UITF is operated and administered by a trust entity. Funds from various client investors are pooled together by the trust entity and invested in different types of investment instruments and securities by the trustee with the objective of providing the client investor maximum returns that is commensurate to the level of risk that is embedded in the trust investment portfolio.
Q. What is the advantage of pooling funds together?
A. By pooling the funds together in a UITF, a client investor is able to participate in the achievement of the fund on economies of scale. Funds have access to better yields on their investments given the size of the fund. Furthermore, the size of the funds will allow efficient diversification of investments, which is an important factor in making prudential investments. By investing the pool of funds in various types of securities, it limits the risk that each investment outlet brings to the overall UITF portfolio. Such investment strategy is reflected in the decrease in the high volatility of investment returns. All these benefits may be achieved in a UITF.
Q. What are the types of UITF’s available in the market?
A. There are different types of UITF’s that client investors may choose from. Each type of UITF has a set of investment parameters and risk level. The common types of UITF funds in the market, among others, are:
Money Market UITF: The fund is primarily invested in money market debt instruments with short term maturity. Due to the nature of its investment outlet there is a low probability of deviating from the expected returns.
Fixed Income UITF: The fund is primarily invested in fixed-income debt instruments, eg. government securities and corporate bonds. Investment securities have a
Q. What is a Unit Investment trust Fund (UITF)?
A. A Unit Investment Trust Fund (UITF) is an open-ended pooled trust fund denominated in any acceptable currency. A UITF is operated and administered by a trust entity. Funds from various client investors are pooled together by the trust entity and invested in different types of investment instruments and securities by the trustee with the objective of providing the client investor maximum returns that is commensurate to the level of risk that is embedded in the trust investment portfolio.
Q. What is the advantage of pooling funds together?
A. By pooling the funds together in a UITF, a client investor is able to participate in the achievement of the fund on economies of scale. Funds have access to better yields on their investments given the size of the fund. Furthermore, the size of the funds will allow efficient diversification of investments, which is an important factor in making prudential investments. By investing the pool of funds in various types of securities, it limits the risk that each investment outlet brings to the overall UITF portfolio. Such investment strategy is reflected in the decrease in the high volatility of investment returns. All these benefits may be achieved in a UITF.
Q. What are the types of UITF’s available in the market?
A. There are different types of UITF’s that client investors may choose from. Each type of UITF has a set of investment parameters and risk level. The common types of UITF funds in the market, among others, are:
Money Market UITF: The fund is primarily invested in money market debt instruments with short term maturity. Due to the nature of its investment outlet there is a low probability of deviating from the expected returns.
Fixed Income UITF: The fund is primarily invested in fixed-income debt instruments, eg. government securities and corporate bonds. Investment securities have a