Delving into the different types of SA equity unit trusts on offer

by , 18 November 2015

Unit trusts can be a great investment vehicle. They're easy to invest in and you don't have to pick individual stocks.

But you still need to make some decisions. You need to decide which types of unit trusts you want to invest in.

If you want exposure to the South African stock market, you have four different types of funds to consider…


How SA equity unit trusts work

 
With unit trusts that focus on South African stocks, they will generally invest in stocks listed on the Johannesburg Stock Exchange.
 
These equity unit trusts must has a minimum of 75% of their funds invested in stocks at all times.
 
Equity unit trusts are all about capital appreciation. There are four broad categories of funds available to invest in…
 

Four different types of SA equity unit trusts

 
Unit trust category #1: General funds
These unit trusts invest in all types of companies and sectors. They offer investors a way to grow their capital over the medium- to long-term.
 
Unit trust category #2: Growth funds
This type of unit trust focuses on investing in high growth companies across different sectors. By doing so they hope to provide capital appreciation.
 
Companies included in these types of funds tend to be growing their earnings and are likely to trade on high price earnings (PE) ratios. 
 
Unit trust category #3: Value funds
This type of unit trust focuses on finding undervalued stocks to invest in across different sectors. By investing in stocks that are trading for less than they net asset value, they hope to give investors medium- to long-term capital appreciation.
 
Unit trust category #4: Sector specific funds
These unit trusts will invest in different specific sectors of the JSE. For example, resources, financials or property.
 
The sector the unit trust focuses on will determine how risky the fund is. For instance, resources are likely to be more volatile than property.
 
So there you have it. Delving into the different types of SA equity unit trusts on offer.
 
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