Quick answer
Both UITFs and mutual funds pool money from many investors and are managed by professionals. A UITF is offered by a bank's trust department, regulated by the BSP, and priced per unit (NAVPU). A mutual fund is a separate investment company regulated by the SEC, and priced per share (NAVPS). For a beginner, the type of fund (money market, bond, balanced, equity or index) and its fees matter more than whether it's a UITF or mutual fund.
Key takeaways
- UITF = bank trust product (BSP-regulated); mutual fund = investment company (SEC-regulated). Neither is PDIC-insured.
- Pick the fund type by time horizon: money market (under 1 year), bond (1–3 years), balanced (3–5), equity or index (5+).
- Compare total yearly fees (trust fee or management fee) and early redemption charges; lower fees compound in your favor.
- Minimums are often ₱1,000 to ₱10,000, and some app-based funds start lower.
- Since July 2025, UITFs and mutual funds are exempt from documentary stamp tax on issuance and redemption.
On this page
UITFs and mutual funds are the easiest way for most Filipinos to start investing beyond savings. You give your money to professional managers, who invest it in a diversified mix of deposits, bonds or stocks. The two are similar enough that the label matters less than the fund itself.
The key differences
| UITF | Mutual fund | |
|---|---|---|
| Offered by | Banks' trust departments | Investment companies (managed by fund managers) |
| Regulator | Bangko Sentral ng Pilipinas | Securities and Exchange Commission |
| You own | Units in a trust fund | Shares in an investment company |
| Price | NAVPU (net asset value per unit) | NAVPS (net asset value per share) |
| Fees | Trust fee (annual, % of assets) | Management and other fees (annual, % of assets); some have sales loads |
| Where to buy | Bank branches, bank apps | Fund companies, distributors, investing apps |
| PDIC-insured? | No | No |
Both compute their price daily and allow you to buy (subscribe) and sell (redeem) on business days, subject to cut-off times and minimum holding periods.
Fund types and when to use them
| Fund type | Invests in | Risk | Suggested horizon |
|---|---|---|---|
| Money market | Short-term deposits, treasury bills | Very low | Under 1 year |
| Bond (fixed income) | Government and corporate bonds | Low to moderate | 1–3 years |
| Balanced | Mix of bonds and stocks | Moderate | 3–5 years |
| Equity | Philippine stocks | High | 5+ years |
| Index (equity) | Stocks in the PSEi, tracking the index | High | 5+ years |
| Feeder / global | Foreign funds or global stocks | High, plus currency risk | 5+ years |
Match the fund to the goal's timeline, not to last year's best performer.
How fees affect your returns
Fees are deducted from the fund's assets, so they reduce your NAVPU or NAVPS every day. Small differences add up:
- An equity fund charging 1.75% a year versus an index fund at 1.0% costs you about 0.75 percentage points of return every year.
- Over 20 years on regular contributions, that gap can mean tens of thousands of pesos less.
Check before you invest: - annual trust or management fee - early redemption fee and minimum holding period - sales load (entry or exit fees), more common with some mutual funds - the fund's performance versus its benchmark after fees over 3, 5 and 10 years
All of this is in the fund's Key Information and Investment Disclosure Statement (KIIDS) for UITFs or the prospectus and fact sheet for mutual funds.
Minimum investment
- Many UITFs: ₱1,000 to ₱10,000 initial, with lower additional amounts.
- Many mutual funds: ₱1,000 to ₱5,000, and some app-based platforms offer funds starting at much lower amounts.
- Some banks offer regular subscription plans that auto-debit a fixed amount monthly, ideal for peso-cost averaging.
Taxes
- Income inside the fund (interest, dividends) is taxed at source, and the published NAVPU or NAVPS reflects that.
- Under CMEPA (effective July 1, 2025), mutual funds and UITFs are exempt from documentary stamp tax on original issuance, redemption and transfer.
- Gains on redemption of mutual fund shares are generally exempt for individual investors.
How to invest step by step
- Decide the goal and horizon (for example, a child's education in 12 years → equity or index fund).
- Take the risk profiling questionnaire required by the bank or fund company.
- Compare 2–3 funds in the category on fees and long-term performance versus the benchmark.
- Open an account online or at a branch with a valid ID and TIN.
- Invest regularly through an auto-debit plan.
- Review once or twice a year, not daily.
Common mistakes
- Using equity funds for short-term goals. A 20% drop right before you need the money is a real possibility.
- Chasing last year's top performer. Funds rarely stay on top every year.
- Ignoring early redemption fees when you need money unexpectedly. Keep your emergency fund separate.
- Assuming UITFs are bank deposits. They are not insured.
For a low-cost core holding, see index funds and ETFs in the Philippines. For retirement with a tax credit, many UITFs and mutual funds are also available as PERA investments.
Frequently asked questions
Which is better, UITF or mutual fund?
Neither is automatically better. Compare specific funds on fees, track record versus their benchmark, minimum investment, minimum holding period and how easy it is to invest and redeem. If you already bank with a trusted bank, its UITFs are convenient; mutual funds are often available through apps and distributors.
Can I lose money in a UITF or mutual fund?
Yes. These are investment products, not deposits, and they are not insured by PDIC. Equity funds can drop significantly in a bad year; money market funds have very low risk but can still fluctuate slightly.
What is NAVPU?
Net Asset Value per Unit is the price of one unit of a UITF, computed daily by dividing the fund's total net assets by the number of units. If you buy at a NAVPU of ₱1.50 and redeem at ₱1.65, your gain is 10% before fees.
How long should I stay in an equity fund?
At least five years, ideally longer. Short holding periods increase the chance of selling during a downturn, and many funds charge an early redemption fee if you exit within a minimum holding period such as 30 to 180 days.
Do I pay tax on UITF or mutual fund gains?
Income earned inside the fund (such as bond interest) is taxed at source, so the reported NAVPU or NAVPS is already after those taxes. Gains you make when you redeem mutual fund shares are generally exempt for individual investors. CMEPA also exempted these funds from documentary stamp tax.
Sources
Figures checked against these official and primary sources on October 4, 2026. Government rates and promos change, so confirm on the agency's site before you act.
- Bangko Sentral ng Pilipinas: Trust and UITF regulations
- Securities and Exchange Commission: Investment Company Act and registered mutual funds
- PwC Philippines: CMEPA, DST exemption for mutual funds and UITFs
General information, not personal financial, tax or legal advice. See our editorial standards and disclaimer. Found an outdated figure? Email support@success.ph.