Advantages of unit trust

Five great reasons to invest in unit trusts: Wealth building on a limited income - BizNews. What is an unit trust? Are unit trusts for You? Can I buy an unit trust?

Funds are managed by fund managers.

Unit trusts are perfect for the novices and busy people, since the funds pooled into unit trusts are. Stockbroker fees may be negotiated lower. Easy diversification. Benefits of Unit Trust. Investment Exposure.

Tax Advantages Unlike a company, a Unit Trust does not have to pay any tax. The beneficiary has to pay income tax on the proportional profits they derive from the trust. Similarly, trusts enjoy a Capital Gains Tax discount regarding disposal of assets, that can be passed on to the beneficiaries if the trust is structured accordingly.

Unit trust is a corporation that pool money from investors and invest in stock market. Every unit trust has its own portfolio with many different securities. Also, by pooling money from many investor, unit trust able to take bigger scale and minimize the investment cost than individual small. A unit trust spreads your money across many investments.

This means that if one investment doesn’t work out, you won’t lose all your savings. The flipside of this: if one investment does incredibly well, your entire holding won’t rise in value to that extent. So, there is less risk, but less return.

They receive distributions. The “closed-ended” advantage Another key difference is that while unit trusts and oeics are structured as open-ended funds, investment trusts are closed ended. You own a share of the overall unit trust or OEIC – if the value of the underlying assets in the fund rises, the value of your units or shares will rise. Similarly, if the value of the underlying assets of the fund falls, the value of your units or shares falls.

The overall fund size will grow and shrink as investors buy or sell. Other key factors will include product pricing , fund choice , asset classes , death benefits and trust options. But before you do that, you need to understand the pros and cons associated with unit trusts. A wide assortment of unit trusts First and foremost, we are spoiled for choice.

Pros of unit trusts. An investor would need $50to $100to put together a diversified bond portfolio.

Once a unit trust purchases the securities, the portfolio remains static. Five benefits of investing in unit trusts 1. Convenience and accessibility. In the event of an emergency, you can access. OEIC advantages over unit trusts As it can cost less for fund managers to run an OEIC than a unit trust , some companies reduced their initial charges when they converted their unit trusts to OEICs, although annual charges remain much the same.

Besides fiduciary duty advantage as listed above, following are other benefits of having a company as a trustee: Assets of the trust are held in the name of trustee (s), if trustee is a company then private assets of Individual. In case of death of individual trustee all assets of the trust have. Although they have different structures - unit trusts operate as a trust and OEICs are established as a company - they share the same tax treatment.

The tax rules aim to put the investor in broadly the same position as if they had invested in the fund’s assets directly rather than through the fund.