I have blogged quite a few posts about Unionbank and as part of my research I noticed this one product of the said bank that caught my attention.
Ladies and gentlemen, welcome to Unionbank’s famous UITF investment vehicle, the Peso Money Market Fund.
The Peso Money Market Fund is a peso-denominated unit investment trust fund that is designed for a higher yield on short-term investor. It is an ideal investment vehicle and/or part of diversification strategy since there’s no minimum investment and you can also immediately access your funds with your own account.
According to their website, the basic portfolio investor will be highly liquid fixed-income, term deposits and other money market instruments, Thus, the confidence level is 99%> The credit risk is also low because it will be limited to Philippine government and investment grade entities.
The Risk Parameters are as follow (taken from Unionbank’s Official Website):
Modified Duration – is the percentage price change of a fixed income instrument for a given change in the level of interest rates. Duration of 1 means that the price of a fixed income instrument is expected to change by 1% for every 100 basis point (1%) shift in the level of interest rates. The higher the duration of an instrument, the higher its risk (all other factors kept equal).
Value-at-Risk (VaR) – is an estimate of the magnitude of loss that a portfolio can experience within a given period of time under certain probability assumptions, or confidence level. For example, a portfolio VaR of 5% within 1 day under a 99% confidence level means that there is 99% certainty that the maximum possible loss a portfolio can experience in 1 day is 5% of its value. Said in the reverse, portfolio losses greater than 5% of its value in 1 day are possible, but the probability of such occurrence is less than 1%.
VaR is often used as a risk measurement tool in portfolio management. The VaR of a portfolio varies depending on the kinds of assets put into the portfolio and their correlation to each other. Portfolios with lowly-correlated assets (i.e. diversified portfolio) tend to have a lower VaR than portfolios with highly-correlated assets. Examples of assets with a traditionally low correlation to each other are stocks and bonds – i.e. when stock prices increase, bond prices normally decrease and vise versa.
The initial NAV per unit is 100pesos and the said investment vehicle is designed for investors with a short-medium-term investment horizon.
I still haven’t decided yet whether to invest with this one or find another investment vehicle to diversify. I am just glad that the local banks have been supporting financial literacy for every Filipino. Who would have thought that investing will be this easy for ordinary people, right?! The only con that I see is that there is a tax included in this mutual fund.
Hope this post helps.
More First Impressions here:
BDO Easy Investment Plan
BPI Save Up plus Insurance
Unionbank Credit Card
BPI Philam Savings