A Unit Trust fund is defined as a pool of funds gathered from a group of investors and is invested into various assets in order to meet the unit trust’s objectives by a fund manager. The collection of these investment funds is managed full time by a professional fund manager.
Usually, an investment portfolio consists of equities, bonds and assets. A unit trust is involves a three-way relationship between the manager, the trustee and the unit holder. The task of the manager is to manage and the operations of the unit trust fund, the trustee holds all the assets while the unit holder in the investor.
- Affordability; A unit trust is a collective investment scheme, therefore investors can start their investment at a relatively low amount
- Diversification; Lower risk as the investor is investing into a diversified portfolio of investments, rather than having an investment portfolio of one or two investments or shares. Better to spread out risks.
- Liquidity; Investment can easily be converted back into cash. Unit trust is inclusive of this feature as units can be easily bought or sold.
- Professional Fund Management; Unit Trust fund managers have the experience, skills and resources to decide where, when and what to invest. They are approved professionals in a highly regulated industry.
- Investment Exposure; For an individual investor, it may be difficult to have exposure to particular asset classes. However, with unit trust investments, it is possible to spread the funds around to all of these asset classes concurrently so that the investor can gain the investment exposure he seeks.
- Regulated Industry; The entire range of variables relating to the unit trust industry is governed by various legislations. The sole purpose of such regulations is to protect the interest of the investing public. Regulations provide investors with a level of comfort that they are investing in a safe investment mechanism.