Putting money in a Unit Investment Trust Fund (UITF) is a good way to start investing. Such products allow you to benefit from the expertise of the fund manager, who handles all the research and decision-making for you.
Further, the assets in these funds are diversified and allocated properly to help achieve a goal, which can match your needs and situation.
However, there might be a time when you want to take money from the UITF, a process that is called redemption. You will probably remember the major details, such as how long it takes to process the redemption (settlement date) and if there will be anything you have to pay (fees and any charges that might apply).
Aside from those, there are a few more things to know that could make this a smoother experience.
Before you begin
UITFs have a minimum redemption amount, which is the smallest value that you can take from your investment. Of course, you can get more than the minimum if you need to.
When choosing how much to redeem, don’t forget to check the fund’s minimum investment amount. You won’t be able to get money that will take your investment below this minimum unless you pull out all your money from the UITF.
When you redeem
When you complete the redemption process, the fund manager receives and processes your order. This can take some time, depending on the type of fund and its policies.
The duration is also affected by the time that you start the process. UITFs have a cut-off period for processing to begin on the same day you made the redemption. If you transact after the cut-off, your request will be processed on the next banking day.
When you get it
Once processing is complete, the money you redeemed will be deposited in your settlement account, which is the bank account you used to fund your investment. You can then use it for whatever you intended it for.
One thing to note: If you redeemed the full value of the UITF, there’s a chance that you will not receive the exact amount you saw in your account.
That’s because the value of your investment is determined by the Net Asset Value Per Unit (NAVPU), which is calculated at the end of the day. If the NAVPU used for your redemption isn’t the same as the NAVPU when you began the transaction, the actual value will be different.
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