Unit Trust

General FAQs

1. What is a unit trust?

   A unit trust pools monies from individual investors and is professionally managed by a fund manager. The monies are then invested in various assets like bonds, fixed income instruments, equities or other asset classes as provided for in the unit trust’s prospectus.

2. What are the benefits of investing in a unit trust?

   The benefits are:

   • Low minimum investment amount
     Depending on the unit trust, you can invest in a unit trust with as little as S$1,000.
   • Professional management
     Your money is managed by experienced and professional fund managers who have access to the latest information on markets and companies and are in a position to make informed investment decisions.
   • Diversification
     One benefit of investing in a unit trust is diversification, which helps reduce risks. With unit trust, you, the investor, are able to spread your investment risks across various markets, sectors and asset classes. By pooling your resources with other investors, you can invest in a range of companies in their respective markets and sectors. This kind of diversification is usually not possible for the individual investor because of limited financial resources and the scale of investment.
   • Access to specialised markets and overseas opportunities
     Unit trust give investors access to specialised and overseas markets. This opportunity is difficult for an individual investor to have because of limited resources.
   • Liquidity
     Unit trust investments can be redeemed at any time and processed on the same day or the next working day, depending on the time that such redemption requests are submitted by the investor. Upon redemption, the fund managers will buy back the unit trusts sought to be redeemed by the investor at a price based on the NAV price of the unit trust investment. Generally, most unit trust investments are valued daily and in some cases, weekly, monthly or quarterly.

3. How do I decide which unit trust to invest in?

   Your choice and decision should be made based on your goals, risk tolerance and investment time horizon. Different unit trusts invest in different asset classes, markets and sectors, depending on the investment objective and strategy of that particular unit trust. Consequently, they also have different levels of risks and returns.

4. Are returns guaranteed?

   Like all investments, there are risks involved. Unit trusts are no exception and returns cannot be guaranteed. Prices can rise or fall depending on a range of factors including market conditions and investors have to exercise judgment and make their own decisions.

5. What is the minimum investment amount?

   This varies from unit trust to unit trust. Generally, the minimum initial investment amount for most unit trusts is S$1,000. For subsequent investments, the amount is lower, usually between $200 and $500.
   
   Please refer to the relevant unit trust’s prospectus for more details.

6. What are the transaction fees/ charges involved?

   Generally, there are 3 types of transaction fees/charges:

   • Sales charge
     For unit trust with net asset value (NAV) pricing, an initial sales charge will be deducted from the investment amount. This is a fee charged by the bank for its services in facilitating the processing of unit trust investments. For unit trusts with bid / offer pricing, the initial sales charge is already factored into the offer price.
   • Annual management fee
     This is an annual fee charged by the fund manager for their management of the unit trust.
   • Trustee fee
     This is the annual fee charged by the trustee for the provision of custody services of the unit trust’s assets.

7. When and where are the purchase prices available?

   Unit trust investments operate on a forward pricing basis. This means that unit trust prices are only calculated at the end of the day after all investments and the cost of all transaction activities have been taken into account.
   
   The unit trust’ prices can be obtained by:

   • Clicking on "Rates" on the footer of the Bank's website.
   • Checking the major newspapers.

8. Will dividends be paid?

   This depends on the type of unit trust you buy. Dividends, if any, are also paid out at the discretion of the fund managers.

9. Who can invest in unit trust?

   You need to be at least 18 years old (as at the date of application for the unit trust) to invest in unit trust. Before investing in any unit trust, please ensure that you have read the relevant unit trusts’ prospectus and the relevant terms and conditions.