Funds 101: An introduction into unit trusts

Julie Brownlee, Fsp Invest, 09 Oct. 2015

Tags: unit trusts, investing in unit trusts, what are unit trusts, benefits of unit trusts, unit trust funds,



If you’re looking to invest for the long-term you have a lot of options.

By opting for unit trusts, you can save yourself the hassle of picking individual shares and it’s easy to build up holdings over the long-term.

So what are unit trusts? And what are the main benefits of investing in unit trusts?

Read on to find out…



What are unit trusts?


Unit trusts are collective investment schemes.

What this means is when you invest in a unit trust, your money goes in with the money of all the other investors in that fund. A fund manager then decides how to invest that money according to the mandate of the unit trust.

You can invest in many different types of unit trusts. They cover a number of different assets including bonds, shares and property. And you’ll find ones to suit your attitude to risk.

Unit trusts aren’t listed on the stock exchange.

There are different types of funds. Some are passively managed, which means the manager tries to replicate the performance of a certain index. Or they’re actively managed. In this case, the fund manager tries to outperform a certain index.

You have to pay different fees to invest in unit trusts. These differ depending on the fund, but you can easily check what they are online via a unit trust’s fact sheet.


The benefits of investing in unit trusts


If you don’t want to select particular stocks to invest in, unit trusts are the perfect alternative. A fund manager makes the decisions. You just need to decide what type of unit trust to invest in.

They’re great long-term saving and investment vehicles as you can invest every month from a couple of hundred rand. This allows you to slowly build up your holdings without having to commit a lump sum.

So there you have it. An introduction into unit trusts.

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