Unit trusts are collective investments that enable you to pool your money with that of other investors who have similar investment objectives. Contego’s experienced investment managers invest this pool of money in different assets in financial markets. This includes a wide range of local shares or equities (companies listed on a stock exchange), bonds, property, money market instruments and their derivatives.
The total value of the pool of invested money is split into equal portions, called participatory interests of units. When you invest in unit trusts, you buy a share of the units of the total fund. The unit price – also known as the net asset value (NAV) – depends on the market value of the instruments in which the pool of money is invested and therefore rises and falls. It is calculated daily.
Why Contego?
Distributed risk
Unit trusts invest in a range of underlying assets. This means that all your eggs are not in one basket. Your risk is distributed amongst many assets rather than in one asset or only a few. If any assets perform poorly, your investment would not necessarily perform poorly as there are other assets that may have done very well.
Easy and accessible
Unit trusts offer a very convenient way of investing in markets which you otherwise would find difficult to access. You can invest as little as R500 per month (monthly debit order) or a R5000 lump sum.
Good returns
History has shown that average unit trust returns compare very favourably with returns from more traditional investment products. The longer you leave your money invested in unit trusts, the greater the opportunity for growth in most cases.
Expert decision
Unit trusts are managed by highly qualified investment managers, whose full-time job it is to make investment decisions. Few people have the necessary time, skills or experience to actively manage their own investments on a day-to-day basis.
Value for money
Unit trusts are designed to provide you with good value. The pooling of money increases buying power, enabling investment managers to buy assets that the small investor normally cannot afford. Fees are competitive and clearly set out, and comprise an annual management fee of the fund's market value and zero initial fees on all investments over R500,000. Management Fees usually decrease on a sliding scale for larger investments.
You always know how much you own
The NAV prices of units are quoted daily in the national press, and can also be obtained directly from the unit trust company. You can calculate the value of your investment at any time by multiplying the number of units you own by the NAV price of your fund. Alternative clients could use Contego’s online facility to obtain a live value of your investments.
You are protected
Your money is held separately from the managing company's assets, in a trust. If anything goes wrong with the company, your money will be safe. The local industry is also strictly regulated by the Registrar of Collective Investment Schemes, the Association of Collective Investments and each unit trust company's trustees, to protect your investment. A vigilant financial press and analysts who continuously monitor the performance of the industry, also protect you. In addition, you receive optional quarterly reports and an annual report listing all the assets in which your unit trust invests.
Flexible investment options
You can either invest a lump sum, so that your entire investment immediately benefits from the growth and income potential of the chosen unit trust, or you can make a regular monthly investment, an easier way of building up capital. The latter method smoothes your investment into the market over time (called rand cost averaging) rather than being affected by a market movement at a particular time. Unit trusts are also transferable and you can invest in somebody else's name.
Easy access
Unit trusts are liquid, so you can cash in all or part of your investment at any time and have ready access to your money, often within 24 hours.
Tax effective
Compared to other investment vehicles, unit trusts are tax effective in terms of Capital Gains Tax (CGT). Firstly, unit trusts are exempt from CGT. Unit trust investors will incur CGT only when they sell their units. This allows investors to defer tax and to plan their investments appropriately.