iSilver, away!
International Exchange Bank (iBank), recently launched iFund Silver, a peso-denominated unit fixed-income investment trust fund.
These funds, also known as common trust funds (CTFs), are just like mutual funds -- pooled funds from various investors that are then placed in various fixed-income instruments such as government bonds and commercial papers, or stocks, or a combination, depending on the investment objective of the fund.
Investors also buy and sell at the net asset value (NAV) per unit for the day. The difference is, they buy units in the fund. In a mutual fund, which is a stand-alone company, investors buy shares in the company.
Another difference is a mutual fund is regulated by the SEC and is required to submit quarterly and annual reports to the SEC and to its investors. CTFs are under the trust department of a bank, which is regulated by the Central Bank. One key difference is that CTFs are subject to the reserve requirements imposed by the BSP, so not all your money can be invested. Just by that, expect lower returns compared to similar mutual funds.
iFund Silver requires a minimum initial investment amount of P100,000, with a minimum holding period of 90 days. Not bad. Mutual funds usually require a one-year holding period if you want to avoid the 1% exit fee.
Would I recommend CTFs over mutual funds? Well, I see more advantages for a mutual fund. Besides, there's greater transparency. Just check out
Business World for the NAV/unit and average returns, and you'll see at a glance how your mutual fund performed against competitors. For a CTF, you have to call the bank to find out (and call other banks to compare returns).
But don't let this stop you from considering CTFs. There are more CTFs available in the market than mutual funds. You might want to consider them as an alternative to 90-day time deposits as they'll likely yield higher returns. So if you have short-term goals or if you're building a 6-month emergency fund, this may be a good place to park your money. Ask your bank about them.
