What are unit trusts?
A unit trust is a pool of money that is invested and managed collectively by professional fund managers, into various opportunities, according to the unit trust's objectives. For example, it could be a fund that's designed to invest in equities, or to tap into investment opportunities in China, or it could be a fund investing in technology opportunities. All in all, unit trusts are a pretty accessible way for anyone to invest in a variety of stocks.
What are the pros and cons of investing in unit trusts?
– Professional expertise. Unit trusts are managed by professional fund managers. You might have heard of the names of some of the big players like Blackrock, Fidelity or First State, amongst others. These are experts whose full-time job is to monitor the markets and make decisions based on their expertise as well as analytical tools that you may not have access to.
– Access into wider investment opportunities. With unit trusts, you're joining forces with many other investors. This larger pot of money allows the fund manager to invest in a wider range of assets that you may not individually be able to access. For example, there may be bonds that require a very high minimum investment that you're not individually able to commit to, or you could experience difficulty investing into foreign markets by yourself.
– Diversification. Each unit trust typically invests in a range of assets which means your risks are better spread out. If one particular asset doesn't perform as well, there's a chance that the gains from other assets could offset any losses, there may not be adverse impact on your investment as a whole.
– Lack of control over how the fund is invested. The fund manager will decide which individual bonds, shares or assets to invest in. This will appeal to those who are not keen or do not have the time or the knowledge to monitor the markets themselves and make such decisions, but it can be a drawback for those who prefer more control.
– Fees and charges apply. There may be sales charges, administration charges, and fund switching fees, charged by fund managers and unit trust platforms.
– Risks. While investing in unit trusts means you're already diversifying some risks, it does not mean there are no risks at all. You should be prepared for market fluctuations.
How can you get started?
You can choose to go direct – there are online platforms available for you to start investing yourself, such as dollarDEX.
If you're not interested in going DIY, then get a professional financial adviser to help you with it. The adviser will do a fact find process with you to help identify your risk profile, affordability and time horizon, which will determine if unit trusts are even suitable for you in the first place. And if you are, the adviser will be able to recommend which funds are suitable for you and get you started on a unit trust platform such as Navigator. He or she may also provide you with regular updates on market conditions and review your unit trust portfolio.
Why choose Aviva's Navigator platform?
Navigator is an investment portfolio administration service, licensed by the Monetary Authority of Singapore (MAS), which allows you and your financial adviser to efficiently manage your unit trust portfolio.
Here are three reasons to check out the Navigator platform.
(1) It's flexible
Together with your financial adviser, you can choose from a range of pricing structures that you're comfortable with. You can also have segregated accounts to manage pots of money aligned to life goals. And you can create joint accounts with your children to plan for their future.
(2) It's varied
Navigator offers access to almost 500 funds across multiple asset classes and countries/regions to suit different risk profiles. The funds available are from over 33 global and local fund managers such as Aberdeen, Franklin Templeton and Schroders.
With the help of your financial adviser, you can switch funds when you need to, say, if your income circumstances change or to adapt to the changing market conditions. With Navigator, there are accounts that offer free switching between funds.
(3) It's seamless
As a Navigator user, you have access to Aviva Online, a web portal which provides easy access for you and your adviser to see the full range of your investments and Aviva insurance policies all in one place. Plus, you can make use of services like investment tracking and consolidated reporting to help you and your adviser easily stay on top of your portfolio.