Advantages and Disadvantages of Unit Trust

The Advantages of investing in unit trusts:

1) This is a good investment option for those who do not have much financial knowledge on investment because unit trust is handled by a professional fund management or expert. The experts will deal with all matters and will of course charge you for such service.

2) This is a method for individual investor to get together and make large investments as a group, and therefore reducing the risks across a range of different stocks.

3) You can choose from many unit trusts and easily diversify your investments.

4) Investors can benefit from the economies of scale at reduced transaction costs.

5) There are no minimum investment periods when you invest in a unit trust.

The Disadvantages of investing in unit trusts:

1) Unit trust may have high cost base if you are investing directly.

2) Unit trusts may not be liquid and early termination costs may apply for premature termination.

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