A unit trust is a pool of money managed collectively by a fund manager. You invest in a unit trust by buying units in a trust. Your money will be pooled with that of other investors and invested in a portfolio of assets to achieve the investment objective of the unit trust.
Advantages of unit trusts
- Professional fund managers with experience and expertise to monitor, research, and analyse.
- Gain access to markets, that may be difficult or expensive to access directly. For example, you may want to tap into the overseas market, but is not familiar with the transactions or regulations.
- Diversification at a fraction of the cost, without having to invest huge amounts of money in individual stocks, bonds or other assets. For instance, some assets such as bonds require minimum investment of $100,000 or $250,000 which makes it hard to spread risks.
For these reasons, it makes sense why unit trusts can complement and add width to your existing portfolio. Investments can be lump-sum or monthly to take advantage of dollar-cost averaging. Use of Cash, SRS or CPF.