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Building your wealth with Unit Trust


What is a Unit Trust?

Unit Trust allows investors with common investment goal (as per the fund's investment objective) to empower a fund management team to invest the pooled money into assets such as stocks, bonds, money market instruments, a combination of these investments or even other funds. 
The collective holdings of individual stocks/bonds held in trust will form the total portfolio of a Unit Trust fund.

The number of units of a fund represents an investor’s proportionate holdings of this portfolio of assets and their proportionate entitlement to the income (if any) generated by these assets. Therefore, the (Number of units of a fund owned by an investor) x That day's price* (NAV per unit) = Investor's entitled net monetary value of the unit trust fund.
 
*The NAV (Net Asset Value) per unit prices announced by fund management companies are already net of the fund's Annual Management Fees and Trustee Fees. We do not charge or collect such fees.

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 Why invest in Unit Trust funds?
 
 Professional Management
Unit trusts are managed by professional fund managers with expertise and experience in investments. They will monitor your investments on a day-to-day basis and make decisions based on research and analytical tools that you may not have access to.
 
 Diversification
A unit trust typically invests into a number of stocks and/or bonds in its portfolio that are from different companies and often from different industries or regions. This means that poor performance of any one security or business sector is not likely to have a major adverse impact on your investment as a whole.
 
 Windows of investment opportunities
Investing in unit trusts not only allows one to gain access to overseas markets at ease, it also allows individuals to invest in products that might not be affordable. For instance, some bonds require a minimum investment of around $100,000 a piece. Thus, Unit Trust is a good alternative for investors to participate in these bond exposures at a relatively lower entry amount.
 
 Lower costs
Costs associated with buying units in a mutual fund could be made lower than buying individual stocks and bonds on your own when building a diversified portfolio due to economies of scale. This is so as the costs of accessing extensive research, as well as administrative, operating and trading expenses are spread among large number of unit trust investors.
 
 Liquidity
Generally, unit trusts are open-ended investments that investor can buy and sell on a daily basis (unless otherwise stated). Fund management companies are mandated under normal circumstances to meet all "sell" requests from the unit holders. 
 
 Considerations when investing in Unit Trust
 
 Entrusted control
Investing in a unit trust, you give up control over the choice of individual bonds, shares and other assets that goes into the fund as fund manager(s) will be making these decisions for you. As such, specific needs of individual investors might not be considered.
 
 Low risk does not mean no risk
Similar to any investments, there is always an element of risk when investing in unit trusts. Although, the risks are relatively lower as compared to direct investments into stocks and shares, it is not eliminated entirely. There could be fluctuations to the daily price (NAV) of your unit trust as the the valuation of the underlying assets might change. Unit Trust is not a capital protected investment.

 

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