What is the structure of a unit trust?
A unit trust is an unincorporated mutual fund structure that allows funds to hold assets and provide profits that go straight to individual unit owners instead of reinvesting them back into the fund.
How does unit trust work in Singapore?
A Unit Trust invests a pool of money, collected from a number of investors, in a range of assets. By pooling your money with that of other investors, you’ll be able to invest in a wide range of assets. Successful investments in the assets add value to the fund and their returns are then distributed back to investors.
How many unit holders can a unit trust have?
the Unit Trust (Non-Fixed) allows two classes of unitholders: ordinary unitholders, with rights to capital and income distributions of the trust in proportion to their unitholdings; and. income unitholders who may, at the trustee’s absolute discretion, receive distributions of income of the trust.
How does a unit trust work?
A Unit Trust pools money and invests in shares, bonds, money market instruments and other investments. The pool is then divided into equal portions called units. Each unit has a price or Net Asset Value (NAV) based on the value of all the assets held in the fund.
How do unit trusts make money?
Unit trusts are a type of mutual fund that can hold assets, with profits that can be given directly to investors instead of being reinvested. Like other mutual funds, it pools together money from various investors to invest in assets like bonds and equities.
What are the disadvantages of unit trust?
Disadvantages of Unit Trusts
- Unit Trusts are not allowed to borrow, therefore reducing potential returns.
- Bid/Ask prices exist – with the price that you can buy a unit for usually higher than the price you can sell it for – making investment less liquid.
- Not good for people who want to invest for a short period.
Who owns the assets in a unit trust?
Instead a trust describes a relationship between various parties whereby a trustee or trustees (the legal owner) hold trust property on behalf of beneficiaries (the beneficial owner(s)). In the context of a unit trust, the trustee holds the trust property on behalf of the unit holders.
Is unit trust taxable in Singapore?
Individuals who derive income from investments in property, shares, unit trusts, fixed deposits, etc. in Singapore need to pay income tax, unless the investment is exempted under the Income Tax Act.
Do unit trust pay dividends?
Returns from unit trusts Some funds pay dividends. The price of each unit is based on the fund’s net asset value (NAV) divided by the number of units outstanding. The NAV is usually computed daily to reflect changes in the prices of the investments held by the fund.
Who controls a unit trust?
trustee
Who controls a unit trust? The unit holders as a group control the trust. This is because the trust deed gives them the power to direct the trustee and if necessary, dismiss the trustee and appoint another person to act as the trustee instead.