How to invest in unit trusts

How to invest in unit trusts

A unit trust is a type of investment arrangement that involves investors pooling their money together to invest in a portfolio of assets. There are a few key benefits to investing in unit trusts. They include the ability to use professional services when managing assets, portfolio diversification, and economics of scale. In this article, we will look at how to invest in unit trusts.

If you are eager to begin, you can visit to learn more and open an account.

Considerations when investing in unit trusts

Determine your investment objectives

Before investing in any financial product, you must understand your investment objectives. Think about what your goals are when you are investing. Are you looking to produce income or grow your capital? Are you looking to invest in the short- or long-term? If you know your goals, you can look for unit trusts that match your needs and fulfil your objectives.

Research different unit trusts

Next, you must do your research in order to find the unit trust that will fit your criteria and needs. There are many different types of trusts available in Singapore. You should consider equity, bond, balanced, and money market funds. You should also look at their investment and return prospects.

Select the broker for you

Next, you should select a broker with whom to open an account. You will need to make sure the brokerage offers the unit trust in which you want to invest, and they have good customer support in case you need help. You should also ensure you have sufficient funds for your investment and the broker is a reputable one.

Consider the fees

When investing in any financial product, it’s essential to consider the fees charged by the provider. Unit trusts typically have two types of fees: management and entry/exit fees. The management fee is a yearly charge that covers the costs of running the fund, while the entry/exit fee is a one-time charge when you buy or sell units in the fund.

Start investing

Once you’ve opened your account, you’re ready to start investing in unit trusts. Decide how much money you want to invest and which funds you want to purchase. Remember to watch the fees your broker charges and the performance of your investment.

Benefits of investing in a unit trust in Singapore

If you are wondering if there are any upsides to investing in unit trusts in Singapore – indeed, there are many. They are as follows:

Professional asset management

When you invest in a unit trust, you’ll have access to professional asset managers who will handle your investment portfolio. These experts will decide where to allocate your funds and how to rebalance your portfolio to help you meet your investment objectives.


Investing in a unit trust allows you to diversify your investment portfolio across different asset classes and industries, which means you’ll be less exposed to risks associated with any particular investment.

Economies of scale

Another advantage of investing in unit trusts is that you can benefit from economies of scale. When large numbers of people pool their money together, the fund manager can make investments that wouldn’t be possible for individual investors. It can lead to higher returns and lower risks.


Another benefit of unit trusts is that they are relatively liquid, meaning you can buy and sell units quickly and easily without worrying about finding a buyer for your investment.


Unit trusts are also accessible to a wide range of investors. In Singapore, no minimum investment amount is required to buy units in a fund, which makes unit trusts an attractive option for those new to investing or with a limited budget.

Risks of investing in unit trusts

Nevertheless, there are some risks when you invest in unit trusts. They are as follows:

Market risk

All investments are likely to experience market risk, which is the chance that the value of your investment will go down due to factors such as economic recession or political turmoil. When investing in unit trusts, you should be aware of the risks associated with the underlying assets in the fund.

Currency risk

If you invest in a foreign unit trust, you’ll also be exposed to currency risk, which is the risk that the value of your investment will go down due to changes in exchange rates. To hedge against this risk, you can invest in a currency-hedged unit trust or use other hedging strategies.

Interest rate risk

Investing in bond funds exposes you to interest rate risk, which is the risk that the value of your investment will go down if interest rates rise. When investing in bond funds, be sure to consider the duration of the fund and your risk tolerance.

Counterparty risk

When investing in unit trusts, you should be aware of counterparty risk, which is the risk that the fund manager will be unable to meet its obligations to investors. Choose a fund with a strong track record and good financial standing to mitigate this risk. 

Be the first to comment

Leave a Reply