Unit Trusts Faqs
A Unit Trust is an investment that pools your money with the money of many other people with similar investment goals. Professional money managers use the pool of money to buy securities that will help achieve the Unit Trust's specified objectives. Unit trusts may be an appropriate retirement investment because they offer professional management and diversification. Unit trusts may involve investment risks including possible loss of principal and fluctuation in value.
- What is a Unit trust?
- What is a Unit Trust?
- Why should I invest in Unit Trusts?
- When is a good time to start investing in Unit Trusts?
- How do I select funds for investment?
- How do I judge a Unit Trust's performance?
- What is a fund share?
- What does NAV mean?
- What does "total return" mean?
- Should I always try to avoid Unit Trusts with the most risk?
- Why should I have a diversified portfolio?
- What is a Unit Fund?
- What types of Funds are available?
- How do I become a Unit Trust Holder?
- How do I transfer my Units From One Fund to Another?
- How do I close my account?
- Who Are the Main Parties Involved With The Trust?
- Are Unit Trusts Guaranteed?
- Can I Hold More Than One Unit Trust Account?
- How Long Should I Invest In A Unit Fund?
- How Much Do I Need To Start?
- What Services Are Available Through Account Access?
- What are the mandatory charges for operating a Unit Trust?
Unit Trusts are a quick, efficient, cost-effective means of managing money. They provide professional management, ongoing supervision of your holdings and automatic diversification, all important elements of a well-rounded investment program. Because shares can be redeemed on any business day, mutual funds provide liquidity, and because shares of a Unit trusts are priced daily, you always know what your investment is worth. Investment return and principal value will vary with market conditions and an investor's shares, when redeemed, may be worth more or less than their original purchase price.
- Why should I invest in Unit Trusts?
The sooner you start, the better. The longer your money can work for you, the better your prospects for wealth-building. The secret is to invest regularly. Regular investing, however, does not ensure a profit or protect against loss in declining markets.
- When is a good time to start investing in Unit trusts?
The first step is to determine the goal or goals you wish to accomplish. Then determine your position on the risk/reward spectrum and eliminate funds that are too aggressive or too conservative. Once you have a list of funds that meet your goals and risk tolerance, review the funds' prospectus to ensure the funds' investment objective and risk meets your individual investment goals. A financial advisor can help you select the appropriate funds for your goals.
- How do I select funds for investment?
To judge performance, you can use sales material relating to the fund, such as unit trust fact sheets, annual reports, Unit trust prospectuses and other ranking information. We believe the funds for your portfolio are best chosen with the help of a financial advisor.
- How do I judge a Unit trust's performance?
A fund share represents a fraction of all the securities (stocks and bonds) owned by the fund. The prices of these securities may change daily; therefore, the value of your fund share may change daily, too.
- What is a fund share?
NAV or net asset value of a stock is the price at which one share was sold to the public as of the previous business day's market close. The NAV of a mutual fund is determined by adding the value of all the securities in the fund's portfolio, subtracting debts and expenses, and dividing the result by the total number of shares outstanding.
- What does NAV mean?
Total return is a measure of a fund's performance including reinvested dividends and capital appreciation. Listings may be calculated for different time periods and many newspaper listings will only provide this information weekly. Check for the time period being used.
- What does "total return" mean?
No, it is possible to invest too conservatively which means you could run the risk of not earning enough to meet your financial goals. Investments that carry a very low risk and more stability tend to have a lower rate of return and you may lose purchasing power over time because of inflation.
- Should I always try to avoid Unit trusts with the most risk?
Diversification or spreading your assets among a variety of investments helps to control the risk of poor performance by a single investment. A diversified portfolio increases your chances for achieving long-term growth. Keep in mind, however, that diversification does not guarantee a profit or prevent losses to your portfolio.
A report on the funds operations and holdings covering six months, or half of the fiscal year. Because they follow a fiscal year schedule and not a calendar schedule, semiannual reports may be issued at any time of year.
- Why should I have a diversified portfolio?
A unit Fund is a pool of savings by like minded serious investors. Prudential invests their pool of money in a spread of investments (a combination of interest bearing securities, company shares & cash) on the Nairobi Stock Exchange.
This assortment of securities is called a portfolio. Each person receives units depending on his/her investment. Each unit has the same value and is an undivided share of the portfolio.
The following are our unit funds:
- Money Market Fund
- Balanced Fund
- Equity Fund
- What is a Unit Fund?
Prudential Funds is currently offering 3 unit funds.
-The Money Market Fund: This will principally invest in government debt instruments. It has minimal risk and offers attractive returns in comparison to current accounts making it an ideal product for clients seeking a ‘parking lot’ for their funds.
-The Balanced Fund: This invests in listed shares listed on the NSE - up to 50%. Offshore deposits - These includes stocks held in Dollar, Euro or Pound denominated securities - up to 10%. ear cash deposits - up to 40%. Clients are advised to invest for at least five years if they are seeking to attain capital growth through investing in this fund.
-The Equity Fund: These are funds that are invested across various shares on the Nairobi Stock Exchange. The objective is primarily capital appreciation. due to the volatile nature of shares these funds are generally long term investments.
- What types of Funds are available?
You fill in an Application form. Application forms can be obtained from our offices, sales agents and can also be downloaded from our website.
To become an our Client you need to:
- Fill out a Prudential Application form and sign
- A copy of ID particulars / passport to authenticate signature
- A certified or most recent bank statement or ATM card to authenticate banking details
- The minimum payment for one Prudential Fund is Ksh 5,000.
Contact a Prudential Agent: Our sales representatives are familiar with all the processes and can assist you in obtaining application forms, delivering your cheques to us etc
Proof of payment as well as a completed application form will result in you becoming a Prudential client. A unit trust account number will be allocated.
Clients will then receive a letter of acknowledgement.
The client will receive a statement at the end of every month showing all transactions that occurred within the month.
Additional Purchases
You will be able to make additional purchases into your Prudential Fund Account. This may be completed in writing by filling out a Top-Up form.
This can either be faxed or mailed to us at our registered address (contacts)
Please note: The minimum amount of paying monthly or topping up your investment is KSh 5,000.
REGISTRATION
To be eligible for direct account access you have to be an existing Prudential Unit Trust Account Holder.
You will have to:
-Click on the Register link or click here
-Fill out a registration form online to provide us with your personal details.
-Read the legal terms and conditions of transacting online. You will have to check on the tick box that you accept the legal terms and conditions before it lets you proceed.
-Click on the submit button
- How do I become a Unit Trust Holder?
If you wish to transfer your units from one fund to another e.g. Balanced Fund to Money market Fund, just fill in the Transfer Form and it will be effected within 5 working days subject to the prevailing terms and conditions.
- How do I Transfer my Units From One Fund to Another?
If you wish to close your account. Just fill the Withdrawal Form, and payment will be done within 7 working days.
- How do I close my account?
The Main parties involved with the trust are you (the investor), the Fund Manager, the trustee and the custodian:
The investor (you) invests his monies with the Fund Manager and receives units in return which may earn interest and dividends depending on the fund type, fund performance etc
The Fund Manager (Prudential Unit Trusts) utilizes the funds received from the investor to purchase securities contained in the unit portfolio. It invests the funds, markets the units and performs administrative functions
The trustee protects the interests of the unit holders ensuring that the Fund Manager is performing its duties in accordance to the Act and is investing the funds in accordance to the prescribed investment policy of the unit trust fund.
The custodian holds the underlying securities in trust for the investors.
- Who Are the Main Parties Involved With The Trust?
No they are not. Unit trust fund values may change on a daily basis and there is no guarantee on the repetition of past performance. However the unit holders own the unit trust fund and the fund is a separate legal entity from the Fund Manager. Further more the custodian holds assets of the trust on behalf of unit holders.
- Are Unit Trusts Guaranteed?
Yes you can. A unit holder can open more than one unit trust account if they please. However it is more cost effective to hold one account so that fees / charges are not applied to each account individually.
- Can I Hold More Than One Unit Trust Account?
This is strongly correlated to the investors’ personal investment goals but generally:
For the Prudential Money Market Fund, which is a low risk fund and considered a safe haven ‘parking lot’, the investor can invest their funds for one to three years or even shorter.
For the Prudential Balanced Fund, which is a medium risk, the investor is advised to invest in the fund for a recommended minimum period of one to five years.
- How Long Should I Invest In A Unit Fund?
- How Much Do I Need To Start?
The client is able to:
- View their account balance
- View and print their account statements online (last statement issued)
- Request transactional history
- Request redemptions (as long as it is to the current banking details on file)
- Email their comments / queries to us
- What Services Are Available Through Account Access?
MANDATORY CHARGES
-The Initial Fee
Investors wishing to invest into the Prudential Fund will be charged a preliminary charge known as the 'initial fee.' The Charge varies with the fund type. Equity Fund and Balanced Fund 3%. This charge caters for all the compulsory costs incurred as a result of creating a price. This includes brokerage fees and stamp duty payable on the purchase of securities.
The initial charge depends on the cumulative amount invested by an investor in an individual fund account and the percentage charged decreases as the cumulative amount invested increases.
- What are the mandatory charges for operating a Unit Trust?
Please remember to specify three things in your correspondence:
- Fund account number
- The amount to be redeemed
- The bank to which your money is to be credited
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