Differences Between Mutual Funds, UITF And VUL

Investing should always start with a proper mindset. Contrary to what other people believe, investing is not just for the rich. Sometimes, we just get caught up with scarcity and stress about money but once you get a grip and get a proper mindset, then you’ll be on your way.

Mutual Funds, Unit Investment Trust Fund (UITF), and Variable Unit-linked Life Insurance (VUL) are just three of the possible investments that you might come across with that are beginner friendly.

MF, UITF, VUL
PHOTO CREDIT: Pixabay

To start, here is a guide about the difference between the 3 most common investments for Filipinos:

What are you buying?

Mutual Funds. You are buying common shares in an investment company.

UITF. You are buying units to participate in the funds.

VUL. You are buying a 2-in-1 life or death insurance coupled with an investment benefit.

How much do you need to start?

Mutual Funds. You can start with P5,000.

UITF. Minimum initial investments start from P10,000 to P100,000.

VUL. Premiums can be as low as P1,800, but you can pay more to top up and invest more.

Fees that you should know of.

Mutual Funds. You pan an upfront fee of 1-2% upon signing up. You also pay for annual management every year and early redemption fee if you opt out earlier than your term. Mutual funds also has back end fees, but some fund houses offer zero fee if you term is more than 5 years, to encourage long term investment.

UITF. Same as Mutual Funds, 1-2% upfront fee, annual management fee, and early redemption fee.

VUL. You’ll pay for upfront fees that depends on the insurance company you are buying from, annual management fees and insurance charges.

Where should you open an account?

Mutual Funds. Investment companies like Sun Life Asset Management, First Metro Asset Management, ALFM Mutual Funds.

UITF. Big banks like Unionbank, Landbank, PNB, BPI, Metrobank, BDO.

VUL. Insurance companies like Sunlife Financial, Pru Life UK, AXA, Philam Life.