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Credits: @Franklin Templeton  

What is a Unit Trust ?

A Unit Trust, commonly known as a mutual fund, is an unlisted investment product which amasses money from a pool of investors to purchase stocks, bonds and other securities. These funds are usually actively managed and are backed by unique investment strategies and objectives (value-oriented, growth-oriented, sector and country oriented) in order to meet the investment needs of market participants.

Pricing of a Unit Trust

Unit Trusts are quoted based on Net Asset Value ("NAV") which is calculated once at the end of each trading day based on the closing market prices, thus often closely reflecting the market value of the underlying assets. The NAV is essentially the price investors have to pay to purchase a single unit and vice versa.

So what’s the difference between a Unit Trust NAV and stock prices? To put it simply, prices of stocks are determined by market forces (supply and demand) while a fund’s NAV depends on how much is invested in the fund as well as the cost to run it and the total value of its outstanding shares.

Unit Trust fees

In an attempt to create portfolios that can potentially outperform the market over the longer term horizon and bring about convenience to investors by eliminating the time needed to conduct their personal research, fund management companies charge an additional fee to investors. These fees can come in the form of subscription, redemption and recurring management fees (expense ratio) which are included in the NAV price.

Nonetheless, investors should also note that besides the fees charged by management companies, they may be required to pay another small fee to fund distributing platforms.

However, here at Tiger Brokers, our investors are not required to pay any additional fees when investing in Unit Trusts.

Head to Discover tab then Fund Mall to browse the funds offering available and enjoy 0% commission when you transact Unit Trust with Tiger Broker’s Fund Mall!