Why choose a unit trust?

So whether it is an overseas trip, a wedding or seeing your child graduate, every goal needs a savings plan to make it happen.

To achieve that goal and to execute that savings plan, a unit trust allows you the opportunity to achieve capital appreciation while simultaneously generating income. Meaning any returns throughout the investment period are reinvested back into the unit trust allowing you to reap the rewards sooner than anticipated.

Factors to consider when choosing a unit trust

• How much time you have to reach your goal.
• The level of growth you want to achieve.
• The amount of investment risk you are willing to take.
• Whether you want to invest locally, offshore, or a combination of both.
• The amount you have to invest, and how frequently you want to invest.

Who should invest in unit trusts?

Anyone who wishes to invest over the short or long term but does not wish to choose assets to invest in themselves. This could be because of a lack of knowledge, time or expertise. Such individuals also require a simple, transparent and low fee vehicle to achieve their investment goals.

How does a unit trust work?

A unit trust pools the money received from many investors. This pool of funds is then invested into relevant asset classes for the particular portfolio by an appointed portfolio manager. This pooled money can be invested in shares (also known as equities), bonds, property, cash and other permitted security types.

The total pool is then divided into equal units (also called participatory interests). All units in the pool have the same value and are priced daily. As a unit trust investor, you hold a certain number of units, relevant to your portion of the portfolio. This means that your investment will go up in value, when the unit price rises, and down in value, when the unit price drops. If you invest more, your number of units increases, and if you withdraw (or redeem), your number of units decreases.

Each unit trust is managed by a registered collective investment scheme (CIS) manager, like Alexander Forbes Investments Unit Trusts Limited (Alexander Forbes Investments). CIS managers operate unit trusts within certain legislative and regulatory requirements, determined by the Financial Sector Conduct Authority (FSCA), and additional guidelines and standards set by the Association for Savings and Investment South Africa (ASISA).

What are the benefits of a unit trust?

You can spread your risk

You can reduce your risk by investing in different asset managers and asset classes (shares, bonds, cash and property), for instance, by investing in a multi-manager unit trust. This is also commonly referred to as diversification.

You get easy access to your savings

You can withdraw some, or all, of your savings easily and usually at no cost to you. You can also set up regular withdrawal payments.

You receive fast payouts*

When you withdraw your money, you will receive payment within 24 hours of submitting your instruction (as long as all the requirements have been met, and subject to certain regulatory requirements). The payment may take up to two days to reflect in your bank account.

A professional manages your investment

Investment experts manage the money within the unit trusts continuously. This gives you peace of mind that your money is in good hands.

The law protects you

To protect you, there are stringent laws that regulate unit trusts. This means that unit trusts operate in a safer environment than unregulated investments.

Fees are transparent

You pay an annual service charge for your unit trust. To see the total expenses of a unit trust, look at its total investment costs (the total expense ratio and the transaction costs).

_{* For offshore portfolios, refer to the Alexander Forbes Investments Global Fund Prospectus on www.alexforbes.com/je/en}

What are the costs involved?

You pay an annual service charge for your unit trust. To see the total expenses of a unit trust, look at its total investment costs (the total expense ratio and the transaction costs).

What are the tax liabilities when investing in a unit trust?

This applies to any income earned in the form of dividends and interest in your unit trust. At the end of the tax year, we will send you an IT3(b) certificate, which gives you the details of what needs to be included on your tax return. If you withdraw from your unit trust or switch between unit trusts, you dispose of an asset and will be subject to capital gains tax. At the end of the tax year, we will send you an IT3(c) certificate, which gives you the details of what needs to be included on your tax return. Some shares pay dividends to their shareholders. Your dividends are paid into your unit trust. The investment manager withholds tax on dividends and pays it directly to SARS.

_{We are not a tax adviser. We are not permitted to provide tax advice. Please contact your tax adviser.}

_{*For offshore portfolios, refer to the Alexander Forbes Investments Global Fund Prospectus}

What types of unit trusts are available?

Fund of funds

A fund of funds invests in a range of different unit trusts, depending on the nature of the specific portfolio. With a fund of funds, you have access to multiple unit trusts within a single investment. The underlying portfolios levy their own charges, which could result in a higher fee structure for the fund of funds.

Single manager unit trust

A single manager unit trust gives you access to one asset manager, with one investment management style and philosophy.

Feeder fund

A feeder fund is a unit trust that invests directly into another single unit trust that is often offshore. The underlying portfolio levies its own charges, which could result in a higher fee structure for the feeder fund.

Multi-manager unit trust

A multi-manager unit trust blends the investment management styles and philosophies of different asset managers into one unit trust. This provides an additional layer of diversification (protection), at no additional cost.

How easily can I access my money?

When you withdraw your money from your unit trust, you will receive a payment within 24 hours of submitting your instruction (as long as all the requirements have been met and are subject to certain regulatory requirements). The payment may take up to two days to reflect in your bank account.

How are the risks managed?

Risk cannot be eliminated but it can be managed. Our solutions are purposefully constructed to spread investment risk, meaning that no single asset class, investment style or asset manager will ever dominate the fortunes of our portfolios. We call this purposeful diversification, and we believe this provides us with a more sophisticated means of enhancing diversification and reducing risk within our solutions.

Why does Alexforbes believe in multi-management?

By blending the best skills and styles of complementary asset managers, we are able to enhance diversification within our solutions, and as such can generate a greater consistency of returns in various market environments, compounding into superior returns over longer periods.