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If equity funds aren't for you, consider fixed-interest unit trusts…

by , 25 November 2015

You can use unit trusts to gain exposure to shares on the stock market, but this isn't the only option for you have with this kind of fund.

You can also invest in fixed-interest unit trusts too.

So what are fixed-interest unit trusts? And what type of fixed-interest funds are available to invest in?

Read on to find out…

The ins and outs of fixed-interest unit trusts

Fixed-interest unit trusts focus on investing in bonds, the money market and other assets which pay an income to investors.
There are various types of fixed-interest unit trusts to consider…

Bond unit trusts

These funds are actively managed and change over time as the fund manager’s assessment of interest rate trends change.
These types of funds offer very limited capital growth, but you should receive a regular income from investing in them.

Income unit trusts

These type of funds invest in different interest earning securities including bonds and fixed deposits.
These funds don’t invest in shares, instead they focus on interest earning securities with a maturity limited to two years.
These funds tend to show low levels of volatility and pay investors a high level of income.

Money market unit trusts

This type of fund invests in money market instruments with maturities of less than one year. These unit trusts try to maximise investor’s interest income and are very liquid.
These are short-term investment vehicles.

Specialist unit trusts

There are other fixed-interest unit trusts which invest in a number of different securities including bonds, fixed deposits, listed debentures and structured money market instruments.
This type of fund looks to maximise income and there may be an element of potential capital growth.
You need to check the fund’s mandate closely to see how the unit trust aligns with your views on risk.
So there you have it. Why you should consider fixed-interest unit trusts.
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If equity funds aren't for you, consider fixed-interest unit trusts…
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