THE investing public may now enjoy dividends from their participation in a unit investment trust fund (UITF) without the need to actually redeem their principal investment.
In a statement on Friday, the Bangko Sentral ng Pilipinas (BSP) said the Monetary Board approved the amendment of the UITF regulations to allow for a unit-paying feature that will provide a non-guaranteed stream of income to investors
The central bank said the amendment of the UITF regulations is in line with its thrust to institute reforms in the Philippine financial system that would enable the investing public to benefit from investment opportunities while ensuring market order.
“This initiative offers several advantages that will ultimately benefit the investing public and the UITF market,” it stated.
The unit-paying feature is also expected to expand the investment choices of the investor, thereby allowing him more opportunities for diversification.
Prior the amendment, UITF regulations did not allow for the distribution of income to participants, as income earned has been automatically reverted back to the fund and the same could only be realized by the investors upon redemption of their participation in the UITF.
With the feature, unit-paying UITFs will invest in various income-generating securities and upon determination of the trust entity, shall give out the income in its equivalent units for automatic redemption.
The central bank explained that income distribution shall come from cash dividends or coupon/interest earned and received from these investment outlets.
“However, income distributions are not guaranteed and will be determined by the trust entity in accordance with the plan rules,” it noted.