There are 4 main types of unit trusts but most people only know of Money Market Funds.
Other types include:
1. Balanced funds
2. Equity funds
3. Fixed income funds.
Let's discuss them below👇👇
Other types include:
1. Balanced funds
2. Equity funds
3. Fixed income funds.
Let's discuss them below👇👇
Let's start with basics.
What are unit trusts?
A unit trust is a collective investment scheme that allows investors with similar investment objectives to pool their money into a fund.
These funds are then invested in various asset classes such as stocks, and bonds.
What are unit trusts?
A unit trust is a collective investment scheme that allows investors with similar investment objectives to pool their money into a fund.
These funds are then invested in various asset classes such as stocks, and bonds.
Unit trusts involve 4 parties:
1. An investor called a unit holder.
2. A trustee who safeguards the assets of the funds
3. A fund manager who manages & invests the pooled funds
4. A custodian approved by CMA. Usually a bank that safekeeps the funds under the unit trust.
1. An investor called a unit holder.
2. A trustee who safeguards the assets of the funds
3. A fund manager who manages & invests the pooled funds
4. A custodian approved by CMA. Usually a bank that safekeeps the funds under the unit trust.
Types of Unit Trusts
1. Money Market Funds.
The basic, widely known & used unit trust.
Involves low risk and used by investors for capital preservation because they offer better returns than banks’ saving & fixed deposit accounts.
1. Money Market Funds.
The basic, widely known & used unit trust.
Involves low risk and used by investors for capital preservation because they offer better returns than banks’ saving & fixed deposit accounts.
2. Balanced funds.Â
They Invest in a mixture of asset classes.
This includes bonds, equities.
A mix of both high risk & low risk classes.
This gives investors an exposure to a diversified portfolio.
They Invest in a mixture of asset classes.
This includes bonds, equities.
A mix of both high risk & low risk classes.
This gives investors an exposure to a diversified portfolio.
3. Fixed Income funds.Â
These funds bear interest generating assets like bonds, bills, fixed deposits.
Majorly preferred by risk averse investors.
These funds bear interest generating assets like bonds, bills, fixed deposits.
Majorly preferred by risk averse investors.
4. Equity funds.Â
A fund that gives investors pure exposure to the stock market.
5. OTHERS.
Depending on the asset management company, the company may come up with other types of unit trusts to meet various investors needs.
A fund that gives investors pure exposure to the stock market.
5. OTHERS.
Depending on the asset management company, the company may come up with other types of unit trusts to meet various investors needs.
Fees.
Asset management companies charge investors for managing their assets. Charges are typically around 2%
But this may change depending on the type of unit trust and the asset management company.
Asset management companies charge investors for managing their assets. Charges are typically around 2%
But this may change depending on the type of unit trust and the asset management company.
Taxes
Profits or interest earned from unit trusts are subjected to a 15% Withholding Tax that is deducted at source.
Profits or interest earned from unit trusts are subjected to a 15% Withholding Tax that is deducted at source.
That's it on unit trusts.
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TL:DR
There are 4 types of unit trusts.
1. Money Market Funds - for capital preservation
2. Fixed income funds - for risk averse investors
3. Balanced funds - Exposure to a diversified portfolio
4. Equity funds -Exposure to the stock market
There are 4 types of unit trusts.
1. Money Market Funds - for capital preservation
2. Fixed income funds - for risk averse investors
3. Balanced funds - Exposure to a diversified portfolio
4. Equity funds -Exposure to the stock market
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