What happens to my UITF investment when the bank closes down?

A lot of new investors who recently started investing in the stock market are getting curious with other Financial Vehicles that we have in the Philippines and one of the famous financial vehicle is the UITF or the Unit Investment Trust Fund.

Few months ago, my friend told me that he really wants to invest in UITF but he is afraid to lose his money when the bank goes bankrupt and closes down.

I also saw this question raised in pinoy money talk forum. Unfortunately it was not answered correctly and there are too many incorrect answers so I decided to write this in my blog.

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What happens to my UITF investment when the bank closes down?

Let’s define UITF
Unit Investment Trust Funds (UITFs) are ready-made investments that allow the pooling of funds from different investors with similar investment objectives.  These funds are managed by professional fund managers and are invested in various financial instruments such as money market securities, bonds and equities. However, these are not insured by the Philippine Deposit Insurance Corporation or PDIC.

Now, When a bank goes bankrupt and closed down, your UITF Investment disappears too and you lose all your money?

No, you will not lose your investment in UITF.

According to Banko Sentral ng Pilipinas

In the event that a bank closes, UITF assets, cannot be touched by its creditors. Investors will still be able to withdraw the market value of your entire investment in UITF’s. This is much way better that PDIC which can only guarantee up to P500,000 of your savings.

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(screengrab from Banko Sentral ng Pilipinas)

There are a lot of Banks that offer UITF, you may inquire to your local banks or check their website if they offer UITF.

According to Aya Laraya “Aral Muna bago Invest'”

See my previous post OFW’s – Jumpstart your Finacial EQ now!

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If you want to know more regarding Investment vehicles then subscribe now, to my blog Super OFW Investor and feel free to share and comment below.

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Nolan Lazaro
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