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What are unit trusts?

What are unit trusts?

  • 02 September 2022
  • By OCBC
  • 3 mins read

When you invest in a unit trust, your money is pooled together with other investors to form a fund. A fund manager then invests this fund into various assets to meet the unit trust's objectives.

The opposite of putting all your eggs in one basket

By investing in selected unit trusts, you can diversify your investment across different countries, industries and asset classes. You instantly access a diversified portfolio at a fraction of the cost, without having to invest huge amounts of money in individual stocks, bonds or other assets!

Your money is managed by a professional fund manager

All you have to do is invest in a fund that you are comfortable with, in line with your risk tolerance, and leave the rest to the fund manager.

Choose between lump sum or monthly investments

With lump sum investments, you can immediately take advantage of prevailing market conditions with just S$1,000. Though the minimum investment amount may vary with funds.

Alternatively, selected funds also give you the option to invest monthly from as little as S$100 a month. Investing monthly potentially lowers the risk of investing a large amount at an unfavourable time. You also benefit from dollar-cost averaging which potentially lowers your average cost of investment over time.

Spread the risk to achieve stable returns

Even within a particular country, unit trusts usually spread your money over the shares of many different companies, and may include other non-share assets such as bonds. This helps you to spread the risk so as to achieve more stable returns.

Leave the work to us!

Most of us wouldn’t be able to afford a fund manager ourselves. Luckily, investing with others through a unit trust allows us to tap on professional expertise and research.

Gain access to different markets

Investing overseas might also be difficult for many of us as it usually involves a lot of administrative work and research. Some types of assets might also require a large initial investment. But with unit trusts, you can access all these different assets, hassle-free.

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