Unit Trusts-Top 3 Benefits of Unit Trusts
Unit trusts in business arise with differently based on the fact of it enhancing general investments schemes that attract investor’s money, then invests it with a specific objective and most importantly managed by a professional fund manager,(Securities Commission of Malaysia).
Top 3 Benefits of Unit Trusts.
Accordingly, the unit trusts help achieve and realize the following benefits, i)Liquidity
An investment in a unit trust is highly liquid as the investor can sell their stake and turn out into cash very quickly within a short period. An investment manager or familiarly called as fund manager must put aside a certain amount of money to ensure that there is enough cash for early redemption of units held by the investors.
ii)Diversification
This isis a risk management technique that mixes a wide variety of investments within a portfolio. (Investopedia.com). However, diversification strives to smooth out the unsystematic risk in a portfolio. So it must contain the varieties of securities that are uncorrelated to each other. Norma Md. Saad et al. (2010) state that unit trust funds can be invested in a variety of assets or investment classes, which may not be available to an individual investor.
iii)Professional Fund Manager
In the unit trust market, the capability of fund managers to manage funds is highly
essential to ensure the funds keep growing and sustain in the market. Fund managers always make research on the market and also economic trends so that they will be able to select an appropriate investment that can generate a high return in future. Investors highly rely on and trust the investment decision made by professional fund managers.
References:
- Overview of Unit Trust Fund in Malaysia:http://www.m-hikari.com/ref/ref2018/ref1-4-2018/p/ ref11-2018.pdf.
- Norma, M. Shabri,, International Journal of Managerial Finance, 6 (2010) no. 1, 24-47. https://doi.org/10.1108/17439131011015779