What are the advantages of unit trusts?
What are the advantages of unit trusts?
Benefits of investing in a unit trust
- Simple and transparent. You do not need to have a lot of time, knowledge or expertise to start investing in a unit trust.
- High liquidity.
- Low initial investment amount.
- Professional fund management team.
- Broad diversification from a single investment.
- Assets held separately by a trustee.
How does a unit trust fund work?
How do they work? UITs raise money by selling shares known as “units” to investors, typically in a one-time public offering. Each unit represents an ownership slice of the trust and gives the investor a proportional right to income and capital gains generated by the fund’s investments, typically either stocks or bonds.
Is unit trust a good investment?
Unit trust investments provide a good foundation for individual investors to fulfill their financial aspirations. However, investing in unit trusts with misconceptions and insufficient knowledge often result in unnecessary disappointments for investors when their expectations are not met.
Can unit trust retain profits?
Despite the lack of ability to retain profits, a unit trust has the ability to pass on ‘tax sheltered income’ to the investors. For instance, while a unit trust may claim depreciation and capital works deductions associated with a property investment, these deductions are not ‘real’ cash expenditure.
Why should investors invest in unit trust?
A unit trust enables you to access and benefit from investments at a much lower cost than if you buy them directly on the security market. From R500 a month you enjoy access to professional investment managers and index tracking funds, offering you local and international investments.
Are unit trusts good investments?
The short answer is yes. A unit trust offers a cost effective manner to access a diversified portfolio of investments. As opposed to buying individual shares and bonds to build your own portolio. These usually come in the form of annual management fees which are net off your investment holdings.
