Anxiety level over UITFs keeps rising
By Jun Vallecera
Reporter

THE head of one of the largest thrift banking institutions in the country bared on Tuesday the rising level of anxiety among investors in so-called unit investment trust funds, especially in recent days.
       But Pascual M. Garcia III, president at the Philippine Savings Bank, refused to categorize UITFs as approaching the level of crisis.
       “There’s a fair degree of anxiety in the marketplace, yes, but I personally think we’re not going into crisis just yet.
       “This will pan out,” the executive, whose bank does not operate a unit investment trust fund of its own, said.
       PS Bank is a fully owned subsidiary of the country’s largest lender, the Metropolitan Bank and Trust Co., whose First Metro Save and Learn Equity Fund has the highest return of over 40 percent year-to-date in the industry.
       A number of industry sources had warned earlier that UITFs, especially those managed by banks, might already be heading towards a crisis whose impact could unhinge already tenuous investor confidence.
       The sources have been saying UITF investors were recklessly lured into the business and quite a number of the more unsophisticated have lost money on something they thought was a secure investment.
       The number of complaints and the volume of investment involved were such that some of the really big participants decided to uproot from the P230-billion market and invest somewhere else.
       Some of the big guys left as late as last week when word got out that the Bangko Sentral ng Pilipinas has started discreetly asking questions.
       “By and large the UITF business, I believe, remains healthy. What some people say as indicative of problems is really more about problems of liquidity,” Garcia said.
       But he acknowledged UITFs are not for just about any investor with a fair amount of surplus earnings, just as the business itself is not suited for just about any bank in the marketplace.
       In essence, UITFs make a one-time public sale of a specific number of redeemable papers, called units or shares, that will dissolve or terminate at some fixed date.
       They differ from mutual funds that also engage in a one-time sale, but these shares later trade on a secondary market.
       People who go into UITFs are supposed to take a stance about where the economy would be at some point ahead and invest in a particular product.
       “A certain degree of economic sophistication is required and in this sense the UITF is not for everyone,” Garcia said.
       Chinatrust president Joey Bermudez had said a good number of unsophisticates have been led to believe that a UITF investment was a virtually risk-free activity, when in truth one could lose one’s shirt in it and still be asked to pay the banks thousands, even millions of pesos in charges.