Do you want to know how Absa unit trust work in South Africa? Read this short article.
We will first show you what a unit trust fund is.
What Is A Unit Trust Fund
This mutual fund pools money and invests in bonds, shares, money market instruments, and other investments.
The pool is divided into equal portions called units, and each unit is assigned a price or Net asset value based on the value of the assets in the pool.
When the funds’ overall performance improves, the units increase in value.
Now that you clearly understand what a unit trust fund is, we will go ahead to show you exactly how the trust fund works in South Africa.
How Does Absa Unit Trust Work In South Africa
Absa unit trusts offer Absa customers greater diversification and minimal risks for investments.
You can invest for short-term or long-term goals.
The funds are grouped in three tiers as per the location, type, and area of focus.
In tier one, funds are grouped by where they sit, meaning that if a unit trust is based in South Africa, at least 70% of the assets must be invested in South Africa at all times.
Tier two are investment-specific funds, including equity portfolios, multi-asset portfolios, interest-bearing, and real estate portfolios.
Tier three is more specific about the type of investment in the specific area of focus.
The funds are managed by experts and are considered an easy way of taking part in the stock market.
You do not really need huge sums of money to invest or wait for a long time to access the invested money.
You can invest in Absa Unit Trust with lump sums or monthly debit orders, or even a combination of the two.
This is how Absa unit trust works in South Africa.
What Is The Cost Of The Absa Trust?
We will show you the cost of investing with Absa unit trust.
The minimum amount to invest depends on the funds you have selected.
The minimum monthly investment is R200 a month and R2, 000 for the initial lump sum investment.
You will be charged 15% VAT as the administration fee on the initial lump sum investment.
There is no performance fee for Absa Unit Trust, but the annual administration fees for the adviser is 0 to 1.15%.
Interest from the investments is taxed, and you will also pay capital gains tax made when you sell units for a higher price than you bought them.
This is all you need to know about how Absa unit trust work in South Africa.
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