This archive report was first published on 13 September 2019.
Published on September 13, 2019, unit trusts have become a popular investment option in Kenya. If you're new to investments, you might want to consider a unit trust. Here's why:
A unit trust is an investment scheme that pools money together from many investors with the same financial objective. It's managed by a professional fund manager who invests the pooled money in a portfolio of securities, such as shares, bonds, and other money market instruments.
The pooled money in the unit trust fund earns income in the form of dividends, interest income, or capital gains. So, why invest in unit funds?
Expert Management ¶
Unit trusts are run by investment managers who have in-depth knowledge of market dynamics. They know which high-yield solutions are available, can predict performance based on past experience, and handle day-to-day processes and transactions.
Regulation ¶
Unit trust managers must be authorized by the Capital Markets Authority (CMA) under the Collective Investment Schemes Act. They must adhere to regulations, such as appointing a trustee, to ensure investor safety. This limits returns but lowers risk.
Transparency ¶
Unit trusts must publish their daily and effective annual yields in the daily newspapers. Investors receive a monthly statement showing their earnings, and they can compare their trust manager's performance against competitors.
Good Returns ¶
Unit trusts generally perform better than traditional investment products. They offer higher returns and a cushion against inflation, as your money grows instead of staying idle in the bank.
Easily Redeemable ¶
Many investors are frustrated by the lengthy process involved in taking their money back. However, with unit trusts, your investment is more easily accessible, whether redeeming part of or your entire investment.
Lower Risk ¶
Since unit trusts invest in a wide variety of asset classes, they lower risk. This makes it a reality for small-scale investors who cannot spread their money across enough investment vehicles.
In general, unit trusts are a great way to invest your money. Depending on your needs, capital, risk appetite, and preferences, you can choose from among the many options available. With so much to gain, you really should consider putting your money into a unit fund.
