Unit trusts are portfolios of assets such as equities, bonds, cash and listed property, in which investors can buy units. This allows investors to spread their risk, whilst getting the benefits of professional fund management.
Other benefits include:
- Easy and cost effective access to the equity, money, bond and listed property markets
- Transparent pricing and performance: unit trust prices are published in the newspapers, reflecting the previous day's closing price. This allows you to determine the value of your investments on a daily basis.
- Easy access to funds within 24 hours
- Protection for investors via a strictly regulated industry
If you're thinking about investing in unit trusts, it's important to consider the following:
- Your investment objectives - Why are you investing? For example, retirement income, a bond, or a holiday home will determine which funds are suitable for you.
- Your time horizon - Whether you need access to your capital in six years or six months'' time, choose a fund that matches your time horizon.
- Protection from inflation - To protect your capital from being eroded by the cost of living, you need to choose a fund that will produce returns well in excess of inflation over the long term
- Market timing - As the average investor may find it difficult to time the market, you may want to consider phasing in your investment over a few months.
How are unit trusts priced?
Unit trusts are priced per unit on a forward pricing basis. This means that when you buy or sell units you do so at the closing price of that day. Pricing changes daily, and is determined by the net asset value (NAV) of the portfolio's underlying investments. Click here to access the latest pricing.
Volatility refers to the extent that the price of a unit trust fund fluctuates over a certain period therefore, its risk. Funds with a high volatility usually offer the potential for higher returns than low volatility funds. Returns may fluctuate more over short time periods and investors need to know what their time horizon is when choosing a fund. If you're close to retirement, your desire for volatility will be less than say someone retiring in 30 years' time.
Type of unit trust funds
- Equity funds - grow capital by investing in the broader stock market or in specific equity sectors such as resources, financial and industrial funds.
- Fixed Interest - Bond funds - invest in a variety of interest-bearing assets such as bonds and fixed deposits.
- Income funds - invest in a variety of interest-bearing assets such as bonds and fixed deposits.
- Money market funds - Also known as cash funds, these allow investors to "park" their money short-term. These are highly liquid investments that offer capital preservation with minimum volatility.
- Asset allocation funds - Also known as balanced or managed funds. A fund manager invests in a spread of assets such as equities, bonds and cash depending on market conditions.
- Global funds - Investec unit trusts offer exposure to international markets with a host of international rand-based and foreign denominated funds to choose from.
To familiarise yourself with the characteristics and objectives of the Investec South African Unit Trust Funds, click here.
How to invest
You can speak to a financial advisor and discuss your specific requirements or invest directly online using our convenient online application form. Alternatively, you can contact one of our client service representatives who are on hand to answer any questions you may have about our products and services. Click here for more information.