A statistical representation of the price of a group of securities representing a market, a group of markets or a particular sector of a market. e.g. ST index, Hang Seng Index, KLSE index. Indices are an indication of the overall movement of a market.
An index that unit trusts and mutual funds measure themselves against. Those that outperform the index are generally considered to be doing well and vice versa.
A security issued by a company or government that promises to give you a fixed sum at a future date in return for a regular, predetermined income till that date. Generally, bond funds do better when interest rates are low.
A constant investment into a fund at predetermined times such that the investor purchases more units when the price is low and less when it is high. The idea is that the overall cost is lower than if only a lump sum of money was invested at one time.
The return achieved over a period of time expressed as the equivalent annual compounded interest rate which would have achieved this performance. Used more to measure performance over long periods.
To pay or receive interest on amounts of interest already received. The "power of compounding" can be huge. Check out Fundsupermart.com's
Forward Compounder to see just how powerful it is.
Bid-Offer spread refers to the difference between the price at which the unit trust is sold and the price at which it is bought. The difference exists because of the initial sales charge, which is the fee levied when you buy a unit trust.
"Historic price" means a price calculated by reference to the valuation point immediately preceding the manager's agreement to issue or, as the case may be, to redeem the units in question;
This means that when you buy a fund with historical pricing, you already know what price you are buying and selling the fund at, unlike forward pricing where you will not know. So, if you see that a fund costs $1.00 as of today, and you place an order today, your purchase price of that fund will be $1.00.
Unit trusts operating on a forward pricing basis means that unit prices are only calculated at the end of the day after all investments, and the cost of all transaction activities, have been taken into account.
Therefore investors who buy and sell a fund before the close of the dealing day will not know the actual dealing price at the point of purchase/redemption.
Confirmed prices for trades on a particular business day are available:
The term "unit trust" is used widely in the British Commonwealth. The term "mutual fund" is used more in America. Throughout fundsupermart, sometimes we will use the word "fund" interchangeably with unit trust. Managers of unit trusts are known as Fund Managers. Their responsibility manage the risk level of the unit trust and maximize returns for you.
It depends on what kind of unit trusts you have. Equity unit trusts can give an average of 12% to 15% a year. Balanced unit trusts can give between 5% to 10% on average a year, and Bond unit trusts can give between 3% to 6% a year.
These are general estimates for long term performance of 10 years or more.
Some unit trust distributors prefer to charge you the initial sales fee the moment you invest in the unit trust. They will deduct a portion off your investment immediately. There is actually no difference in cost whether the sales charge is levied upfront or built into the bid-offer spread. A simple way to look at it is one system makes you pay when you buy the fund, the other makes you pay when you sell it.
Think of it as a big pool of money that many people contribute to. This pool of money is invested by professional fund managers into stocks, bonds and other investment instruments. By contributing to this pool of money (buying 'units' of the unit trust), you will be given a little piece of the total portfolio (i.e., you OWN a part of the unit trust). If the value of the investment instruments which the unit trust invests in increases in value, your unit trust will be worth more than the price which you bought (i.e., you make money).
Before you jump in, there are several things which you need to find out about yourself. Your risk tolerance, investment goals, time horizon and so on. Go to our Getting Started section in our School to find out more. After doing that, you should find the fund whose investment objectives match your own. Make use of our Fund Selector and read our fact sheets to compare and contrast the unit trusts available. You may also register as a member and read our recommendations. Soon you will find one which you are comfortable with. Start with that first. As you gain more confidence and understanding of unit trusts, you may then invests more.
Fund Managers of Unit Trusts usually invests in many different stocks or bonds, across many different sectors. They do this in order to spread the risks (what is known as diversification). For example, a Singapore unit trust might hold stocks of banks, property companies and manufacturing companies. Any negative developments affecting any one sector is thus limited to only a portion of the unit trust. There might be positive developments in the other sectors which may cancel out the negative effects of the first sector. In this way, diversification minimizes the impact of negative developments and lowers the risks of investment.
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