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Unit Trusts

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 What is a Unit Trust? 

A unit trust is a collective investment scheme (CIS) which enables you to pool your money with other investors into a single portfolio. The portfolio is divided into equal portions called “units” and each unit is valued daily. The “unit price” is based on the value of the market value of the instruments in which the pool of money is invested. 

The portfolio is actively managed by the appointed asset or investment manager in accordance with its theme. These could include value, where the manager invests your funds in companies that appear cheap relative compared to the market, or geographical, such as emerging markets. 

Collective investment schemes such as unit trusts are accessible, flexible, well-regulated, and transparent medium to long-term savings vehicles.

 How can I buy a unit trust on the EasyEquities platform? 
Unit Trusts are available in the following EasyEquities accounts:   

- EasyEquities ZAR  

- TFSA  

- EasyEquities RA  

You can access them by logging into your account and selecting any of the above accounts.

What is the minimum investment? 
EasyEquities has no minimums. This means that you can Invest in as much or as little as you want. You can either invest a lump sum amount so that your entire investment immediately benefits from the growth and income potential of the chosen unit trust, or you can make a regular monthly investment by setting up a recurring investment. You can learn more about recurring investments by clicking on this link - How to set up a Recurring Investment?
Fees

Each unit trust may have different fees associated with the fund. There are various reasons for the difference in fees, for example;

- Whether the fund is active or passively managed.  

- The size of the fund  

- The frequency of any trading activity (buying and selling within the fund)  

As per legislation, each unit trust must have its own fund factsheet or minimum disclosure document (MDD) which provides investors with more information about the fund and all the fees associated with it. These can be found and accessed on the buy page for each unit trust under ‘Fund Information’. 

Performance fee: A performance fee is essentially an additional fee which is linked to the performance of the fund. This means lower fees will apply when performance is poor and higher fees when performance is good. This is done to align the interests of the fund manager and the investor. 

NB

All Unit Trusts within the TFSA will not have a performance fee.

EasyEquities has a standard platform fee of 0.25%. For more information on the fees associated with Unit Trusts, please consult the cost profile.

Understanding Factsheets 

The Collective Investment Schemes Control Act (CISCA) requires that all unit trusts provide a minimum disclosure document (MDD), which many refer to as a factsheet. Among other things, this document details how the unit trust operates, its performance, risk profile and the costs associated with it. You can use factsheets to gain more insights into the unit trusts you are considering investing in.
Listed below you will find they key information to look out for when you open a factsheet (NB: each factsheet may differ).

Fund Objective: This will give you guidance as to what the fund sets out to achieve. It usually indicates which investors are suitable to the fund. The objective generally gives you an indication of what the fund invests in. 
Risk Profile: The risk profile will indicate the risks associated with investing in the fund. Funds with a higher/aggressive risk are likely to go through more changes and this a greater variance of high and low returns than those with a lower risk. 
Fees and costs: Each Unit trust will have its own fees and costs clearly shown on the factsheet. The most common fees are broken down below:

- Initial Fees: These are once-off fees charged at the inception of the investment. All fees are inclusive of VAT. These fees may or may not be applicable and vary between companies, so it is important to look out for this on the factsheet. (Initial fees are applicable to brokers, with no brokers on our platform, there will be no initial fees). 

- Total expense ratio (TER): This is the fee paid to the investment manager of the unit trust and includes: Annual service fee Fund’s bank charges Fund’s audit fees Taxes (stamp duty, VAT) Performance fees. 

- Transaction Costs (TC): These are necessary expenses that arise from managing and administering a unit trust. (eg: buying and selling of the assets within the underlying the portfolio) 

- Total investment cost (TIC): The total investment charge (TIC) is the sum of the total expense ratio (TER) and the transaction cost (TC). This is the fee to take note of if you are looking for the full fees associated with a unit trust. So in short, TER+TC = TIC 

Benchmark: This lays out the ideal targets for a unit trust, by stating its goal and benchmark. A unit trust measures its success in achieving its goal by comparing its return to that of a benchmark. Typically, a fund is benchmarked against an index, inflation, or its category average. 

Performance: The fund performance table shows how the fund has performed relative to its benchmark over different periods. All the figures are expressed as an annual rate.

- Graph performance: The graph reflects the cumulative growth on an investment at inception of the fund together with the benchmark and a possible performance target. Some funds use R100 as an example and others may use differing amounts from as little as R10.

 How is my investment protected? 
Unit trusts are governed by the Collective Investments Scheme Control Act (CISCA), monitored by independent trustees and are highly regulated by the Financial Services Conduct Authority (FSCA). Your money is held separately from the Manco's assets in "trust". If anything goes wrong with the company managing the unit trust, your money is safe as it is held separately.
Allocation Times

Unit trusts work on a T+1 basis. What this means for you is, if you choose to invest in a unit trust before the cutoff times on a business day (T), your units will only reflect after 17:00 at the end of the next business day (T + 1)
- 12:30 for Money Market
- 13:30 for non-money market
If you choose to buy a unit trust after the cutoff time, your units will reflect in two business days as “T” becomes the next business day and T+1 becomes the second business day. Units bought on Friday, with the above in mind, will be allocated into your account the following business day (i.e. Monday or Tuesday, depending on if cutoff was missed or not).

 Why have you limited the Unit Trust offering on EE? 
The world of unit trusts can sometimes be overwhelming to investors as there is simply a lot of funds out there. This is where we step in because, we have done all the hard work and research for our investors to ensure we have offered a range of unit trusts.
Instead of you having to sift through hundreds of funds, the due diligence has already been done for you as we have offered the best performing unit trusts within each ASISA category.
 How do we add a new unit trust?  
Adding new unit trusts will be based on demand from our investors. You can simply use the below form to submit a suggestion.

We aim to offer the best products for our investors both in price and performance. Please note that submitting your request is not a guarantee that the unit trust will be added to our platform.

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