Unit Trusts (or mutual funds) have become very popular investment vehicles in Zimbabwe. Unit trusts are collective investment schemes which involve the pooling of funds on behalf of a large number of investors, with each investor buying a certain number of units in the total fund (at the unit price ruling at the time of investment), representing their proportional investment. The capital pool is invested in carefully selected shares listed on the Zimbabwe Stock Exchange as well as money market instruments. The income or capital appreciation from these investments accrues to each investor in proportion to the amount they invested. The funds are professionally managed to achieve maximum returns consistent with the stated investment objectives of the fund.

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Advantages of Unit Trusts

  • Unit trusts provide potential for capital growth on your investment over the medium to long term, making them an excellent hedge against inflation.
  • The pooling of funds into a unit trust portfolio spread across various shares and other assets provides diversification of risk for the investor.
  • Managing investments requires excellent administration, an in-depth knowledge of market trends, prudent risk management and an abundance of time. Unit trusts are managed by highly qualified professional portfolio managers, hence you the investor need not worry yourself every day about monitoring performance of the markets and daily administration.
  • In the past, the benefits of investments were enjoyed by institutional and high net worth individuals only. Today, unit trusts are an excellent investment option for both small and large investments. With Datvest Unit Trusts you can invest an initial amount of only $250 for the equity funds and $10 for the money market fund.
  • Unit trusts reduce dealing/transaction costs. Pooling money with that of other investors allows access to the expertise of professional fund managers hence the cost advantages of buying in bulk. An individual investing a small amount on their own could find dealing costs very high in proportion to the investment amounts.
  • Unit trusts offer the advantage of liquidity. This means that they are easier to buy and sell compared to quoted shares. Your funds are therefore available at short notice should you need them.

Types of Funds

The following three types of unit trust funds are available: General Equity Fund, Specialist Equity Fund and High Income Fund.

General Equity Fund

The fund offers a balanced equity portfolio for investors looking for solid, long-term capital growth. It mostly invests in selected shares with strong long-term growth prospects as well as blue-chip and emerging blue-chip shares.

Specialist Equity Fund

This fund is a speculative equity fund geared to more risk tolerant investors looking for substantial capital growth in the medium to long-term. The fund is managed to take advantage of changing investment opportunities and identifiable pricing discrepancies. In other words, the fund invests in shares that are believed to be underpriced but have potential for significant upside.

The stock market by nature is volatile; hence the capital invested in equity funds is more at risk in the short term. However, equity funds generally increase in value over time and have potential to outperform other investment types as well as inflation in the long term. Investors should, however, note that past performance is not a guide to future returns and the value of investments can fall as well as rise.

High Income Fund

The fund invests in a broad selection of high quality fixed income securities such as Treasury Bills, Bankers’ Acceptances (BAs), Debentures, Commercial Paper, Fixed Deposit Instruments and Negotiable Certificates of Deposit (NCDs).The fund offers a risk-free return and is therefore suitable for risk averse investors who require capital stability and an income from their investment as opposed to achieving capital growth.

Unit Pricing

The price of units is calculated and reported upon on a daily basis. The unit price of the fund is calculated as the market value of the underlying securities added together divided by the number of units in issue. There are two prices quoted for units for each fund- an offer price and a bid price. The offer price represents the price an investor pays to buy units. The bid price is the price an investor would receive when selling units. The difference represents the charge made by the fund manager and the costs incurred in buying and selling shares within the fund. The unit price will either rise or fall depending on the movement in the prices of the underlying securities held by the fund.

Additional Information

To open a unit trust account with us, investors should note the following conditions of service: Minimum initial investment amount - $250 for the equity funds and $10 for the money market fund. Minimum initial period of investment- 3 months for equity funds and 30 days for money market funds.

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