How to choose right unit trusts to invest
For newbies who want to dip their fingers in the world of investment, one of the first considerations is choosing between a lucrative profit or devastating loss. Newbies need to be very careful about their choice of investment. They can choose to go for lower risks investments at first and diversify investment portfolios later on. If you’re new, the best way you can start your investment journey is through unit trusts investment.
What is it? A unit trust is a portfolio of different assets offered by banks and financial institutions while being managed by professional managers. It is a mix of shares, bonds, and real estate among others. The portfolio is divided up into “units”, which are then purchased by investors.
Unit trust investment policy. Unit trust investment policy revolves around the objectives & goals of the fund and declares what asset classes the fund can and can’t invest in. Investors must identify a fund whose investing strategy will complement their personal financial goals.
Unit trust track record. While past performance is not a sure indication of future returns, investors should be interested in a fund with a good track record and long-term sustained success. You don’t necessarily need to look for a fund that offers good returns on the whole, but ones that do consistently in either buoyant and sluggish markets.
Fund manager experience. It’s not always about the brand of the fund itself but who is behind the scene selecting the investments. Fund Managers can be an individual or a group of persons responsible for implementing fund investing strategy and management of portfolio trading activities. This makes it important to know that the individual meets the necessary qualifications and professional experience to make wise and profitable investment fund decisions.
Unit trust cost structure. You want to know what fees are applicable and charged by the fund, which includes the management fee, load fees, administrative costs, and other operating costs. Having someone manage your money costs a bit, but you want to make sure that you get the lowest fee possible without sacrificing quality. This becomes even more important if the fund’s performance lags its index and peers because those high fees could easily eat into your returns.
You can find most of the information on the investment policy, fund manager, cost structure, etc. in the Unit Trust’s trust deed and offering circular. All investment houses by law must provide their potential clients an Offering Circular which is generally a summary of the Trust Deed. As such, it is wise that you read thoroughly the offering circular of the funds you are considering before plunging into unit trust investment.
Of course, investors like you are encouraged to do exhaustive research to understand the investment product before putting hard-earned money into any funds. If you keep the above considerations in mind it will become easier to research and get a good unit trust fund. Check the website of the provider where you want to start your unit trust investment. Check user reviews to see the real accounting of a provider. With this, you’ll find it easier to make your returns reflect your efforts. Keep in mind that wealth creation and management need a long-term commitment. Best of luck!