What is a unit trust?
A unit trust pools money from many investors, which is then invested in a variety of assets in order to meet specified investment objectives. The pool is managed by a team of full time professionals and a trustee is appointed to protect the interests of the unit holders.
What are the types of unit trusts available?
Unit trusts can be divided into several categories depending on their investment objectives and focus. In general, they are divided into three main categories: shares, bonds and balanced funds that combine shares and bonds. Some funds are invested in a single country (e.g. Singapore, Thailand), some in specific regions (e.g. Asia, Europe) and some globally. There are also funds that focus on specific sectors or industries such as technology and healthcare.
Why invest in unit trusts?
Unit trusts offer several advantages.
First, you can select a fund or a combination of funds to cater to your specific investment goals and tolerance for risk.
Second, through unit trusts you can invest in securities that you may be unable to access as an individual investor. These securities include bonds that usually require a big minimum investment amount. It may be difficult for you to invest directly in overseas stocks whereas you can conveniently invest in unit trusts investing in international stock markets.
Third, funds invested in unit trusts are managed by professional fund managers and analysts. You can therefore benefit from their expertise and full time attention to investing the funds.
Fourth, buying and redeeming unit trusts is simple and convenient. You can get updated values of the price of your unit trust from DBS bank website or the newspapers. Most unit trusts in Singapore allow daily buying and selling of funds.