Investing in unit trusts easy and affordable

A wide variety of unit trusts caters to your investment needs, and capacity to take and stomach investment risk.

To help support transformation of the sector, Sowetan Money plans to profile easily accessible and suitable unit trust funds managed by black managers.

Investing in unit trusts is considered cheap and easy as your money is pooled with that of other investors and used to buy financial instruments like shares and listed property among others. Picture: 123RF
Investing in unit trusts is considered cheap and easy as your money is pooled with that of other investors and used to buy financial instruments like shares and listed property among others. Picture: 123RF

The money managed by black asset managers makes up less than 10% of SA’s savings and investments and less than 1% of investments in unit trusts.

According to multi-manager 27four’s report on transformation in the investment sector, only two of the existing black managers are managing in excess of R50bn.

This is a challenge for a country trying to transform its investment sector and encourage more black people to save and invest.

To help support transformation of the sector, Sowetan Money plans to profile easily accessible and suitable unit trust funds managed by black managers.

Investing in unit trusts is often considered one of the most affordable and easiest ways for ordinary people to start investing as your money is pooled with that of other investors and used to buy financial instruments like shares, bonds, listed property or instruments in the money markets in both local and foreign markets.

There is a wide variety of unit trusts tailored to meet your investment needs, and your capacity to take and stomach investment risk.

We start with an equity fund that invests in shares offered by Mergence Investment Managers, an independent majority black-owned boutique asset management company founded in 2004.

Mergence manages money for both institutional investors like retirement funds and individual investors through unit trust funds.

The manager offers a general equity unit trust fund that invests across the shares listed on the JSE, giving you access to a diversified portfolio of shares chosen by a professional team that analyses the market and selects shares it expects to do well.

The fund is invested in listed companies, the financial sector, basic materials, consumer services, industrials, consumer goods, telecoms and healthcare, and has its biggest holdings in Naspers, Datatec, Standard Bank, MTN, Anglo American, Sasol, RMB Holdings, BHP, Argent Industrial and Old Mutual.

The objective is to achieve returns that are in excess of the market over any three-year period without putting your money at great risk, says Bradley Preston, the head of listed investments at Mergence Investment Managers.

This is an investment you should only consider if you have a longer-term investment horizon because the investment is exposed to the market and may go either up or down, especially over shorter terms.

Although you are free to withdraw your money from a unit trust at any time, you have a greater chance of earning a good inflation-beating return if you stay invested in a unit trust for a longer term.

Returns in equity funds are lumpy and the fund’s fact sheet shows that it has in the past recorded positive returns of more than 33% in a year and a loss of more than 13% in one year.

The fund was established in 2011, so its longest history is seven years. Over this period on average, the fund has returned 9.79% a year when other equity funds investing in the JSE returned on average 8.58% a year.

The investment is available for R500 a month.

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