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Unit Trusts


Reinvesting distributions

Most unit trusts will make some sort of income distribution during the year. If you've decided on a unit trust to provide you with income, then you may have invested in a trust which will provide regular distributions, perhaps monthly or quarterly.

If you've invested in a trust as a long-term investment, the Shape of Money recommends that, as with any other investment, you arrange to have the distributions reinvested to take advantage of compounding growth.

What else could you consider before investing in an unit trust?

  • Can you make additional contributions to the fund, either by a regular savings programme and/or lump-sum payments?
  • Check the size of the fund. If you're comparing two or three trusts, ask why one fund is bigger than another. The bigger fund will at least offer greater economies of scale and may also indicate a fund's popularity.
  • Because you're not making the investments directly, review the investment statement, in order to fully understand what the fund is to be invested in. You may not be comfortable, for instance, in a fund invested in an industry responsible for clearing virgin forests for development.

Information you could read

  • In the first instance, read the investment statement. This will outline the above information (and more) for that particular trust.
  • Other documents you could read include the prospectus, trust deeds and any other financial statements relating to the unit trust. These documents are not designed for selling or marketing, so they may be more difficult to get hold of and will certainly be more difficult to read and understand.
  • Some Rules for a Safe and Successful Investment

Other resources

In our savings and investments section there are a number of useful books you could consider buying or borrowing. Most of these include some information on investing in unit trusts.

Review the media in our links page and newspapers such as the National Business Review.