A UNIT-PAYING feature that will provide a stream of income to market players is now allowed under the unit investment trust fund (UITF) program, the Bangko Sentral ng Pilipinas (BSP) said.
Early this month, the Monetary Board approved amendments to UITF regulations, allowing for the distribution of income to the participants.
This, the central bank said, will allow the investing public to be able to take advantage of investment opportunities this year.
UITF is an investment vehicle that pools funds together from different investors with similar rules and fund objectives for yield. This is usually operated and administered by a trust entity of a bank.
Prior to this amendment, UITF regulations do not allow for the distribution of income to the participants, as income earned is automatically reverted back to the fund, and the yield may only be realized by inventors upon the redemption of their participation in the UITF program.
This means that the new feature, the unit-paying UITF, will enable the investor to enjoy the fruits of his investment without actually redeeming the entire actual principal investment.
“The income distribution shall come from cash dividends or coupon-interest earned and received from these investment outlets,” the BSP said.
However, income distributions are not guaranteed and will be determined by the trust entity in accordance with the plan rules.
In addition, such income distribution will decrease the net asset value of the fund, and consequently, a decline in the net asset value per unit similar to the effect of dividend declaration on stock prices,” the BSP added.
The central bank said that this amendment is set to offer several advantages that will ultimately benefit the investing public and the UITF market.
It is also seen to expand the investment choices of the investor and allow the market for more opportunities for the diversification of their investment vehicles.