Diversification
As the old saying goes: “Don’t put all your eggs in one basket.” This certainly holds true for investments. A unit trust facilitates this by providing small investors the opportunity to pool their resources together for the purchase of a diversified portfolio of authorised investments. By pooling your funds, you gain access to investment opportunities which are normally unavailable to individual investors.
As the old saying goes: “Don’t put all your eggs in one basket.” This certainly holds true for investments. A unit trust facilitates this by providing small investors the opportunity to pool their resources together for the purchase of a diversified portfolio of authorised investments. By pooling your funds, you gain access to investment opportunities which are normally unavailable to individual investors.
Therefore, diversification involves spreading your investments around so that you have a variety of assets in your portfolio. Spreading your money within and across different asset sectors may produce better, more consistent returns and reduce risks. Diversification gives you the opportunity to benefit from the growth potential of many investments. It reduces the risks associated with holding just one investment.
Professional Investment Services
You will gain access to the expertise of experienced full time professional investment managers to manage your investments, which is not generally available to individual investors with a small amount of money to invest.
You will gain access to the expertise of experienced full time professional investment managers to manage your investments, which is not generally available to individual investors with a small amount of money to invest.
Investment managers possess experience and expertise, and continuously monitor the performance of your fund's investments. Through a disciplined process, they will manage the assets of the fund and ensure that the money is well invested. They will also adopt an active investment approach with careful risk management to ensure that the funds are managed professionally and efficiently.
Liquidity
Units can be readily redeemed with the manager any time on a business day, at the ‘buying price’ at the end of the business day on which the written request to repurchase is received by the manager. You must however remember that an investment in unit trusts is for the medium to long-term, and that you may not achieve any gains if you redeem too soon.
Units can be readily redeemed with the manager any time on a business day, at the ‘buying price’ at the end of the business day on which the written request to repurchase is received by the manager. You must however remember that an investment in unit trusts is for the medium to long-term, and that you may not achieve any gains if you redeem too soon.
Simpler Way of Investing
Unit trust offers investors a simpler, more convenient, less time-consuming method of investing in securities than trading individually. You will be relieved from the burden of administrative paper work, investment research and analysis of the investment portfolio. All administrative work is done by the manager and does not require any active participation on the part of the unit holder.
Unit trust offers investors a simpler, more convenient, less time-consuming method of investing in securities than trading individually. You will be relieved from the burden of administrative paper work, investment research and analysis of the investment portfolio. All administrative work is done by the manager and does not require any active participation on the part of the unit holder.
Reduced Risks
Investors in unit trusts will gain access to a broader range of securities as compared to if they invest on their own. By spreading the investments in a diversified portfolio, this will reduce the investors’ risk exposure.
Investors in unit trusts will gain access to a broader range of securities as compared to if they invest on their own. By spreading the investments in a diversified portfolio, this will reduce the investors’ risk exposure.
Capital Growth
When you invest in a unit trust fund, you are allocated a number of units in accordance with the size of your investment at the prevailing unit price. The value of your units, or the unit price, varies according to the underlying value of the assets, which the trust holds. The assets of all funds are valued on a daily basis, with fluctuations reflected in the unit price. As the value of the assets rise or fall, the value of your investment will rise or fall accordingly.
When you invest in a unit trust fund, you are allocated a number of units in accordance with the size of your investment at the prevailing unit price. The value of your units, or the unit price, varies according to the underlying value of the assets, which the trust holds. The assets of all funds are valued on a daily basis, with fluctuations reflected in the unit price. As the value of the assets rise or fall, the value of your investment will rise or fall accordingly.
While the value of growth assets such as shares and property investments may fluctuate in the short term, they have the potential, over the long term, to achieve capital gains and outperform inflation. This is in contrast to fixed term deposits, which generally achieve a lower rate of return on capital.
Sources: Ambinvestment
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