A money-market fund and an equity fund can both be unit trusts while behaving very differently. The term describes the pooled legal and operational structure, not one level of risk.
A unit trust pools money from many investors. The fund uses that pool to hold assets such as shares, bonds, cash or listed property according to a stated mandate. In return, each investor owns units representing a proportion of the fund.
The unit price changes as the value of the underlying assets changes. If you invest R10,000, you do not receive a fixed interest promise merely because the balance appears on a platform. You own units whose price can rise or fall. Income may be distributed or reinvested, depending on the fund and your instruction.
The mandate, holdings, costs and time horizon matter more than the label alone.
Try this now
Find the minimum disclosure document for one unit trust. Identify its objective, asset mix, benchmark, risk indicator, fee measure and recommended investment period. Check that the fund name and share class match your statement.
Ask your advisor
- What does this fund own, and what role does it play in my plan?
- How quickly can units be sold and money paid?
- Which risks are most likely to affect its value?
Unit prices and past performance can change. Neither a familiar fund name nor a historical return is a promise.