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Investing in Unit Trust/Mutual Funds


Patrick N.F. Crowl, Funds & Research Manager Barita Unit Trust Management Co. Ltd.
Investing wisely in any investment vehicle is an essential step towards meeting your short, medium and long-term financial goals. Of the many investment options available, one of the safest is a Unit Trust. But what is a Unit Trust? A Unit Trust is an unincorporated mutual fund structure, which enables small and large investors to pool their savings in a common fund. This allows investors to take advantage of investment opportunities in a wide variety of instruments that would not normally be available to them as individuals. This structure allows funds to hold assets and pass through profits to the individual owners, rather than reinvest profits back into the fund.
The Benefits of Investing in a Unit Trust.
Pooled Funds are ideal for individuals and companies that are interested in having a trained professional manage their money. The funds in the Trust are invested in selected portfolios and managed by a fund manager whose sole responsibility is to monitor the performance of the fund to maximise returns for the investor. Unit Trusts are ideal for long-term investors hoping to save towards goals such as retirement, buying a house, a car or a child’s education. With regular reporting to unit holders and regulatory authorities such as the Financial Services Commission in Jamaica, Unit Trusts provide security for their members. A Board of Trustees whose specific responsibilities are outlined in a trust deed designed to protect member’s interests governs the pooled funds. Some of the stipulations include the amount of fees that are charged and the investment choices that are made by the fund.
Other benefits include:
1. Tax Free (on investments held for 5 years)
2. Ease of early encashment
3. Competitive rates
Types of Unit Trust
There are different types of Unit Trust funds in Jamaica. The two most popular are the money market/fixed income funds and the growth (capital) funds. The money market funds are comprised of high quality money market instruments including; Government papers such as Local Registered Stock (LRS), Repurchase Agreements (Repo), T-Bill, and Debentures. These types of instruments are considered safe, as the Government of Jamaica has never defaulted on its debt obligations. Growth funds are typically made up of equities (stocks/shares), fixed income securities, and real estate investments – all three or any combination thereof. With a growth fund, the fund manager seeks to benefit from the capital (stock price) appreciation of the equity that the fund has invested in, and may also invest a portion in Government of Jamaica papers or real estate to provide a hedge against negative equity price movement. Unit Trusts have over the long term provided steady growth for its unit holders. It is a simple method of investing that allows small to large investors to maximise their returns through professional management while having easy access to their funds.



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