Introduction to Unit Trusts
Unit trusts pool money from different investors to purchase stocks, bonds and other assets. They are operated by professional investment managers who invest this money on behalf of the investors.
One great way to invest your hard-earned money is by investing in unit trusts.
Unit trusts pool money from different investors to purchase stocks, bonds and other assets. They are operated by professional investment managers who invest this money on behalf of the investors.
Why invest in unit trusts?
- Professional Management. The investment managers do the research for you. They select the assets and track their performance while you sit back and watch your money grow.
- Diversification. Unit trusts typically invest in a range of companies and industries. This helps to lower your risk if one company fails.
- Affordability. You don’t need a lot of money to start and keep investing in a unit trust.
- Liquidity. Most unit trusts allow you to easily withdraw your money in case you need it for an emergency.
- Regulated – Unit trusts are regulated by the Kenyan regulator, the Capital Markets Authority (CMA). This helps in safeguarding your investments
Types of unit trusts
- Money Market Fund. Money market funds invest in short-term debt securities such as treasury bills (short-term debt from the government) and commercial paper (short-term debt from the companies). It is generally safe and a great tool for saving as your money grows.
- Equity Fund. This fund invests in shares and offers high risk. It’s a great investment over the long term (5 years or more).
- Balanced Fund. This fund invests in a mix of traded stocks, property and government bonds. It offers investors long-term growth as well as reasonable levels of income.
- Fixed Income Fund. This fund invests in interest-bearing securities, such as treasury bills and bonds, preference shares, corporate bonds etc. It is recommended for mid-term investments (2-3 years)
Where to start
Most of the big banks in Kenya with investments subsidiaries offer unit trusts. Other companies include Britam, Old Mutual, ICEA LION, CIC and Sanlam.
Each company offers different rates and products. Please do research to find the one that best suits your budget and needs.
Final Note
Unit trusts provide an easy way to start investing and get you closer on your way to becoming a future millionaire
Disclaimer: This article provides information and education for investors. Please do your research and consult your financial advisor before making any decisions.
Thank you for this. It’s truly insightful.