A Unit Trust is an investment plan that allows all investors to contribute their funds collectively. These funds are then invested in different investment opportunities, and the investors benefit from high profits. The collected and invested funds are divided into units and are valued based on market value. You can get units in unit trusts in Singapore. Therefore, the number of units you have determines your share of revenue and the right to vote. Thus, the property of the trust unit is divided into several units (shares). Just as a shareholder subscribes to the company, the beneficiaries also subscribe as units to a unit trust.
A unit trust cannot be regarded as a separate legal entity compared to an individual or a company. A unit trust can be viewed as a relationship in which the trustee is obliged to hold property to benefit the unit holders.
The trustee must comply with the trust act and must act in the best interest of the recipients. In the case of a unit trust, the fund manager makes a professional investment decision and is responsible for managing the fund operations.
There are three types of funds. Based on his investment needs, an investor can choose. The following are the three types:
Revenue funds: Revenue funds are primarily invested in securities for fixed income. Revenue funds have a lower risk compared to equity funds. The unit holders are paid annually for dividends.
Balanced funds: Balanced funds are funds that invest both in equity and insecurities of fixed income. Compared to income funds, the risk level is high in balanced funds. However, balanced funds provide high returns in capital appreciation and dividend payments in the long term.
Stock funds: Stock market equity funds will invest. A high level of risk is involved in equity funds, and long-term high return provision is expected.
Aunit trusts in Singapore is a low-risk investment plan with low returns. Since the annual operating expense of Unit Trust is more melancholic, most investors prefer it to the mutual fund. There is an investment manager in Unit Trust who knows how to manage the funds because they are professionals. By investing in a Unit Trust, you can diversify your risks using an investment portfolio that your investment would otherwise not achieve. The investor has the professional fund manager’s services.
Liquidity is easily accessible. You have affordable investment opportunities. In the case of Unit Trusts, you can quickly pay for your investments by simply submitting your certificate to the manager. To sell your units, merely give the completed “Redemption Form” to the fund management company. The form is available at the back of the certificate of your unit. The fund allows large and small investors to invest in a common fund and thus take advantage of various investment opportunities to make good returns.