Miscellaneous 

When would you use a unit trust?

Leia Doyle

When would you use a unit trust?

Both types of trusts are often used together. For example, a Family Trust often holds units in a Unit Trust. Family Trusts work for one family. Unit Trusts are appropriate for two or more families – joint ventures, businesses or partnerships in the managing of assets.

What is a subscriber in a unit trust?

Each Unit Holder agrees to take up the number of units in the Unit Trust that they determine (and which are set out in the Deed). The monies paid by the Unit Holders comprise the trust fund that is held on trust by the Trustee.

How do I cancel my unit trust?

There are three ways that you can terminate a Unit Trust:

  1. Revocation. The Unit Trust Deed may contain a provision that allows the trustee, third parties, or settlors to revoke the trust.
  2. At the discretion of the unit holders. Unit Holders can terminate the fixed trust if they have full capacity.
  3. Distribution.

Can a trustee be a Unitholder?

Yes, a trustee can also hold units in a unit trust. Simply delegate both the roles of trustee and unit holder to a trust entity by ticking both boxes in Step 2 of the application form (in each entity’s separate profile).

What is the risk factor of unit trust?

Market Risk – Fluctuation in the market caused by uncertainties in the economy, political and social environment will affect the NAV of the unit trust. Equity Investment Risk – The value of equity investment is mainly determined by its potential growth in earnings, amongst other factors.

How do you wind up a unit trust?

This is how you wind up a Unit Trust Deed:

  1. Distribute any capital that is left to the Unit Holders.
  2. Build a Debt Forgiveness Deed to forgive loans owed to Unit Holders and related parties.
  3. Your Accountant prepares any outstanding tax returns.
  4. Build and sign both the Unit Trust Vesting deed and the minutes.

What are the disadvantages of unit trust?

Disadvantages of Unit Trusts

  • Unit Trusts are not allowed to borrow, therefore reducing potential returns.
  • Bid/Ask prices exist – with the price that you can buy a unit for usually higher than the price you can sell it for – making investment less liquid.
  • Not good for people who want to invest for a short period.

Can unit trust make you rich?

You may not grow your wealth with dividends, but unit trusts help you grow your wealth through capital gains. If their value increases to more than what you paid for them, you will get capital gains. If you choose to redeem your units at this higher value, you will enjoy a profit from your investment.

Which is the best unit trust?

Best performing unit trusts in South Africa 2021

  • Old Mutual Gold.
  • Anchor BCI Global Equity.
  • Nedgroup Inv Mining&Res.
  • Sygnia FAANG Plus Equity.
  • Ninety One Commodity.
  • Allan Gray Balanced Fund.
  • ABSA Money Market Fund.
  • Coronation resources. Investing in a unit trust requires an open-minded individual with a bold heart.

What is the benefit of investing in unit trusts?

The main advantages of investment into a Unit Trust fund is the reduction in investment risk by way of diversification as well as having approved professional investment managers manage the funds. Unit trust investments generally tend to invest in a range of individual securities.