Unit Trust

Good things come in small packages. Know why unit trusts can work for you.


We know that wealth accumulation is about planning your short-term and long-term goals by using time as an ally. Unit Trust is an important investment opportunity to look at in order to achieve your wealth accumulation objective because it helps you enhance your net worth to meet your medium to long term goals. 

The trouble with investing, as an individual is two-fold: 
#Your relatively limited funds may not allow you to spread your risk across a number of investments very easily 
#They don't provide enough muscle to attract the best returns or economies of scale. 


What is a Unit Trust?
What happens with a Unit Trust is that the combined resources of many individual investors are pooled together in one large "fund", which can then enjoy both of those advantages, This fund is managed by a professional fund manager, who invests the money in a wide range of stocks, shares and other instruments which are collectively known as a "portfolio". Not only does this portfolio mean that all your eggs are not in one basket; you can also choose between different portfolios featuring lower or higher risk investments. You therefore end up with a very broad variety from which to choose, according to your individual risk profile.


So what are the benefits of investing in a Unit Trust?
#Diversification - the spreading of risks over a wide variety of securities in different sectors. Normally to do this, you must have a substantial amount of money to buy a diversity of stocks. However, unit trust funds facilitate this by providing small savers with an opportunity to pool their savings to invest in a diversified portfolio of stocks. You could think of this as not putting all your eggs in one basket. 
#Professional Fund Management - your ability to employ a team of well-trained, in-house investment professionals who conduct full-time regular investment research and analysis in managing the assets of fund. With such investment expertise, research facilities and information network, sound investment decision may be made. 
#Liquidity - you can redeem all or part of your units on any Business Day and the Manager will purchase them 
#Hassle Free - you need not trouble yourself with complicated decision making and arduous paperwork involved in investment in the securities market. 
#Affordability - you only need a small amount of money to participate in a professionally managed portfolio of investment and enjoy benefits accorded to others when investing in high-priced securities. At the same time, you can also reap returns from a portfolio of investment as opposed to a limited number of securities when one invests in the market directly. 

For medium to long term investing, Unit Trust is an attractive option. Chosen with care and qualified advice; they can earn you healthy returns at an acceptable level of risk. Investors can purchase Unit Trust from individual Unit Trust fund house agents or from Institutional Unit Trust Agents (e.g banks) offering such products.

The following are a few considerations to look into before you choose your agent/ bank:
Choice
#Whether it allows you to access to the widest possible range of unit trusts funds 
Objectivity
#Gives you objective advise on the funds that suits your investment profile and goals 
Expertise
#Tools and methodology to identify your financial needs and the gaps 
Service
#Responsiveness and product knowledge of agents/Personal Financial consultants 


Choice of management company
#Long term track record plus consistency 
#Current management team