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Unit Trusts

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What is a Unit Trust? 

A unit trust fund is a portfolio of investments that has been divided into units. Each unit is valued daily, based on the value of the underlying investment portfolio. Depending on the type of unit trust fund, the portfolio could consist of shares, property, bonds and other fixed income assets – both locally and offshore. 

Dividends and interest from the underlying investments are either reinvested or paid out. 

Unit trusts are a good way to diversify risk through different assets classes as well as geographical areas. 

Unit managers invest according to themes. 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. 

You have the peace of mind that the Financial Sector Conduct Authority regulates all Unit Trusts. 

How can I buy a unit trust on the EasyEquity platform? 

At the moment, unit trusts are only available inside the EasyEquity Retirement Annuity, Preservation Funds and Living Annuity. 

Fees

Each unit trust fund will have a different fee associated with the fund. There are various reasons for the difference in fees, for example, whether the fund is active or passively managed, a share is usually more expensive to buy versus a bond for example, the size of the fund and the difference between local and offshore instruments. 

Please refer to each unit trusts fund fact sheet or minimum disclosure document for more on their fee structure. 

To check on all fees associated with a unit trust on our platform please refer to our cost profile here.

Unit Trust terminology

There is some jargon associated with unit trusts and fees, here is a clear explanation. 

  • Platform or LISP fee – this is a fee charged by the platform housing your unit trusts. In this case it is EasyEquities. The platform with EasyEquities is 0.25% ex vat per annum. 
  • TER – Total expense ratio. 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.
  • TIC – Total investment cost. The total investment charge 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.

Why do we only offer certain unit trust managers? 

The unit trust universe is large, our investment committee has therefore carefully selected the funds that we would like our clients to have access to. The investment committee looks at the history of funds, the managers, historical performance, asset allocation, fees and their style of investing. 

How long should I invest in a unit trust? 

Each unit trust will have its own ideal time horizon. It depends on what the fund is trying to achieve. If it is a conservative, income deriving unit trust then 1 to 3 years is ideal. If the fund is targeting maximum return in equities then you would like to leave invested for at least 5 years. 

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