What are the differences between ETF, Mutual Funds, and UITF?

The best place to start investing depends on your financial goals, as well as how much money you can afford to invest.

How do I know what to invest in?
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I have been asked this question many times. And my answer is always... There is no simple answer to this question. You must first decide what your financial goals are. What do you want to accomplish, and in what period of time? What's your risk tolerance, the amount of risk that you're comfortable with? Without a clear understanding of your desires, your needs, and your potential concerns, what to invest in is not clear.
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Here's the point. The most important thing you'll ever do in your financial life is to decide to truly understand the various types of investments and what their potential risks and returns are.

Here are some investment vehicles you can choose from and what their variations are:

Exchange-Traded Fund (ETF)

It is a type of pooled fund investment security that operates much like a mutual fund that can be traded in a stock exchange.​ It is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, ETF trades like a common stock on a stock exchange.

Issued by
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• Investment Company

How to invest
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• Register through any accredited PSE Stockbrokers

Minimum investment
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• If bought through the exchange, minimum investment would be dependent on price and board lot.

Trading Strategy
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• Generally passive

Regulatory body
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• Philippine Stock Exchange (PSE) and Securities and Exchange Commission (SEC)

Intraday trading
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• Can be traded intraday at market price; price guidance through iNAV disclosure every minute.

Entry and Exit costs

Similar to trading a stock—brokers commission, transaction fees, etc.

Management fees
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• Same fees in stock trading; lower management fee.

Redemption

• Cash and/or shares of the underlying assets.

Mutual Fund
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It is a pooled fund, affordable investments, investing in a basket of securities, professionally managed, and instant diversified. You can choose where to invest your funds: Equity Funds, Index Funds, Bond Funds, Balanced Funds, and Money Market Funds.

Issued by
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• Mutual Fund company and Investment company.

How to invest
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• You can open an account through a licensed mutual fund agent.

Minimum investment
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• Dependent on fund manager (by law, the minimum investment is Php 5,000).

Trading Strategy
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• Can be passive (if fund is an index tracker) or actively managed.

Regulatory body
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• Securities and Exchange Commission (SEC)

Intraday trading
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• Purchase at NAV which is calculated at end-of-day (NAVPS)

Entry and Exit costs
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• Front-end load, back-end load, and redemption fee.

Management fees
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• Sales load (front-end, back-end) and some with redemption or pre-termination fee.

Redemption
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• Cash

Unit Investment Trust Fund (UITF)

It is an open-ended pooled investment fund handled by a fund manager. It is quite similar to a mutual fund, the only difference is that UITFs are offered by banks and are thus regulated by the Bangko Sentral ng Pilipinas (BSP).​

Issued by
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• Banks and trust corporations.

How to invest
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• Through a trust representative of a bank.

Minimum investment
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• Dependent on fund manager.

Trading Strategy
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• Can be passive (if fund is an index tracker) or actively managed.

Regulatory body
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• Bangko Sentral ng Pilipinas (BSP).

Intraday trading
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• Purchase at NAV which is calculated at end-of-day (NAVPU).

Entry and Exit costs
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• Early redemption fee.

Management fees
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• Some with early redemption fee or pre-termination fee.

Redemption
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• Cash