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What is a unit trust?
A unit trust pools money from individual investors and is professionally managed by a fund manager. The funds are then invested in various assets like bonds, fixed income instruments and equities as provided for in the prospectus.
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What are the benefits of investing in a unit trust?
The benefits are:
- Low minimum investment amount
You can invest with as little as S$1,000, depending on the fund.
- Professional management
Your money is managed by experienced and trained professionals who have access to the latest information about markets and companies, and are in a position to make informed investment decisions.
- Diversification
One benefit of unit trust investments is diversification, which helps reduce risks. With unit trusts, 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 the 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 trusts give investors access to specialised and overseas markets. This opportunity is difficult for the individual to have because of limited resources.
- Liquidity
You can sell your unit trust investments anytime on any business day.
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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 fund.
Consequently, they also have different levels of risks and returns.
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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 and investors have to exercise judgement and make their own decisions.
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What is the minimum investment amount?
This varies from fund to fund. 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 respective fund prospectus for more details.
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What are the fees/ charges involved?
Generally, there are 3 types of fees/charges:
- Sales charge
For funds with net asset value (NAV) pricing, the initial sales charge will be deducted from the investment amount. For funds with bid / offer pricing, the initial sales charge is already factored into the offer price.
- Annual management fee
- Trustee fee
These charges are reflected in each individual fund's prospectus and are usually built into the bid/offer prices.
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When and where are the prices available?
Unit trusts operate on a forward pricing basis. This means that unit 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.
Therefore, confirmed prices for trades on a particular business day are available:
- At the Bank's website http://www.dbs.com under 'Rates Online' and TCS Teletext by 7 pm the next business day.
- In the major newspapers two business days later.
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When can I sell my units and what is the charge?
Investors can redeem or realise their units on any business day at no charge. Please visit any DBS or POSB Branch to fill up the form. If you have an account with us, we will credit your account.
Alternatively, we can send the proceeds to you via cashier's order to your mailing address.
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Do I need to pay tax on the income earned from my unit trust investment?
Capital gains are not taxable in Singapore. Thus, the profits earned when you sell your unit trust will not be taxed. However, the Trustee of the fund has to withhold tax at the corporate rate (currently 26%) when distributing income to unit holders, regardless of whether the units are actually held by a corporation or an individual.
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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.
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What is the frequency and content of fund updates/reports?
Most fund updates are given quarterly and information include market reviews, fund performance, the market outlook, the top 10 holdings of the fund and the fund's asset allocation.
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Who can invest in Unit Trusts?
You need to be at least 18-years-old to invest in unit trusts. Before investing in any unit trust, please ensure that you have read the fund prospectus and the relevant terms and conditions. This information is available online.
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How do I invest in Unit Trusts through POSB iBanking?
To invest in unit trusts online, you need to be a POSB iBanking user.
You can get your User Identification (UID) and Personal Identification Number (PIN) at any of our ATMs. It is easy and convenient.
Alternatively, you can sign up at any POSB branch, or complete and mail the application form to us.
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What Unit Trusts can I buy through POSB iBanking?
Currently, you can invest in selected funds offered by our product providers. Please login to POSB iBanking to view the full list of funds.
Application Through iBanking
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How do I buy Unit Trusts on POSB iBanking?
To apply, just follow the steps below:
- Log on to POSB iBanking and click on "Investment Services" > "Unit Trust Application".
- Select your choice of unit trust and your nationality and click submit.
- You are advised to read the prospectus carefully, which contains details of the Fund, and the terms and conditions before you continue with the application.
- Enter the amount that you wish to invest in the Fund.
- Select your debiting account, enter your contact number (in case we need to call you to clarify) and click on "Submit.
- At the confirmation page, confirm your application by clicking on the "OK" button.
- Print the acknowledgement page or note the Transaction Reference as you need to quote it when making future enquiries on your transaction.
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Can I purchase funds jointly with another account holder?
If you have exisitng unit trust holdings on a joint basis, you can increase your joint holdings by buying online. If you do not have existing joint holdings, you can only make online purchases for yourself.
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Can I top up my existing unit trusts through POSB iBanking?
Yes, you can do so. You may choose to increase your holdings by making a subsequent investment. You can increase your holdings for both existing personal and joint account funds.
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How do I pay for my Unit Trust purchase?
You can debit the funds from your existing Personal or Joint-alternate Savings, Savings Plus, Current or Autosave accounts. From the account selection, click on the account that you wish to use as the debiting account.
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Can I use my CPF funds to purchase Unit Trusts?
You can do so if your CPF Investment Account is with DBS. If not, please visit any DBS or POSB Branch to invest using CPF funds.
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How will I know if my application to buy is successful?
Upon successful submission of your application, you will see an acknowledgement screen with a transaction reference to confirm that your application has been successful. You will also see the unit trust listed under your Account Summary on the next business day.
You will also receive a confirmation letter from us informing you of the confirmed price and the number of units allotted to you.
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Can I cancel my application request?
You cannot cancel your application online once it is submitted. Please call our Customer Service Officer at 1800 111 1111 for assistance.
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After I have applied for a unit trust, can I see it in the Account Summary immediately?
You will be able to see your unit trust holdings on the next business day after the prcies and the number of units have been determined.
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How can I check my existing fund holdings?
You may check your existing unit trust holdings through our Account Summary service. Alternatively, when you apply to purchase additonal units of the fund, your existing holdings will be reflected.
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Is the unit trust service available 24 hours a day?
Yes, this service is available 24 hours daily. Subscriptions made before the respective fund's dealing deadline as stated in the prospectus will be processed on the same day. However, subscriptions made after the fund's dealing deadline will be treated as the next business day's transaction.
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Can I purchase unit trusts using other means besides iBanking?
You may also buy unit trusts through our ATMs or at any DBS or POSB Branch.