What are mutual funds?

What are mutual funds aka unit trusts aka collective investment schemes funds?

A mutual fund also known as a unit trust is a collective investment that enables you to pool your money with other investors who have similar investment objectives.

It is not required of investors to be knowledgeable about shares as experienced investment managers invest this pool of money in different assets in financial markets.

This includes a wide range of international 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 (referred to as “units” or “shares”).

When you invest in these funds, you buy a share of the units or shares of the total fund. The unit price (also known as the net asset value (NAV)) fluctuates daily as it is dependent on the market value of the instruments in which the pool of money is invested.

The NAV price is calculated weekly. In order to cater for all investors, a wide range of funds are offered based in US Dollars currency.

This range includes funds that generate income to capital growth in the medium to long term (three to five years and longer).

Investments should typically be held for these periods to reap the full benefit of the investment and to sustain any market ups and downs.

Collective investments such as these are the most accessible, flexible, protected, regulated and transparent long-term savings vehicles.

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