What are the Benefits of Investing in a Unit Trust?

Diversification – the spreading of risks over a wide variety of securities in different sectors. Normally to do this, you must have a substantial amount of money to buy a diversity of stocks. However, unit trust funds facilitate this by providing small savers with an opportunity to pool their savings to invest in a diversified portfolio of stocks or you could think of it as "not putting all your eggs in one basket".

Professional Fund Management – your ability to employ a team of well-trained, in-house investment professionals who conduct full-time regular investment research and analysis in managing the assets of the Fund. With such investment expertise, research facilities and information network, sound investment decisions may be made.

Liquidity – you can redeem all or part of your units on any Business Day and the Manager will purchase them.

Hassle Free – you need not trouble yourself with complicated decision making and arduous paperwork involved in investment in the securities market.

Affordability – you only need a small amount of money to participate in a professionally managed portfolio of investment and enjoy the same benefits accorded to others when investing in high priced securities. At the same time, you can also reap better returns from a portfolio of investment as opposed to the limited number of securities which one can invest individually.

Comparison of Unit Trusts with Direct Investments in the Stock Market & Fixed Deposits

Unless a person has a very large amount of cash for direct investments in individual stocks, he may not be able to achieve a sufficient level of diversification. Losses in one or more of his stocks may substantially reduce the value of his portfolio. Unit trusts, on the other hand, have a diversified portfolio and losses in some of the stocks held are offset by gains in others. Nevertheless, a person with an undiversified portfolio may reap great returns if one or more of his stocks increase in value. Unit trust prices rise more gradually when some of its stocks' prices increase as the unit prices are based on the total value of the portfolio.

Fixed deposits are generally safe and the returns are guaranteed. Nevertheless the returns are generally lower and may be eroded by inflation. Unit trusts generally aim to achieve returns that are higher than fixed deposits but such investment carries the risk that losses may be incurred.