Mutual Funds Basics
Investing in unit trusts is easier than you think. It's a great way to save for those medium- to long-term goals.
Unit Trusts are a form of collective investment that allows investors with similar investment objectives to pool their funds to be invested in a portfolio of securities or other assets.
Unit holders do not own the securities in the portfolio directly. Ownership of the fund is divided into units of entitlement. As the fund increases or decreases in value, the value of each unit increases or decreases accordingly. The number of units held depends on the unit purchase price at the time of investment and the amount of money invested.
The return on investment of unit holders is usually in the form of income distribution and capital appreciation, derived from the pool of assets supporting the unit trust fund. Each unit earns an equal return, determined by the level of distribution and/or capital appreciation in any one period.
Investing in Unit trust transfers most of the necessary know how to those best equipped to handle it-that is the UTT -AMIS (Fund Managers).
There are other substantial benefits that one may gain by Investing in Fund managed by UTT AMIS;
Spreading your investment reduces the overall risk of the investment and maximizes returns. There is no limit to the number of investors who can hold units in any of our funds. The more investors there are in the fund, the greater the resources available for investment leading to greater diversification of the portfolio.
UTT AMIS Managers manage all five funds. They are world class professional asset managers with a track record of excellent returns in the Tanzanian market. Active portfolio management helps maximise investor returns.
Unit Trust funds are statutorily entrusted to the Capital Markets Authority and controlled by the Collective Investment Schemes Regulations Act, aimed at protecting the investor. These regulations relate to the activities of the Unit Trust management companies.
Unit trusts provide the opportunity to affordably purchase top performing shares. The investor is able to obtain all the shares that the fund has invested in with a single purchase order.
FLEXIBILITY AND INVESTMENT TERMS
You can invest for as long or as briefly as you like. There is no fixed investment period. Unit Trusts are easy to buy and easy to sell. An investor can change the asset allocation depending on their circumstances - one can change from equity-based investments (shares) to fixed income securities (Treasury Bills and bonds) or a mixture of both as required. This is subject to the offer document of the particular fund.
You can invest for as long or as briefly as you like as per fund features. This means investing without formally committing to a contractual period. Not only are you able to decide the day you wish to sell, but the money due to you is available in the very short term. Since investing is a long term exercise, investors are advised to have a long term view of the market.