Unit Trusts: What You Need to Know and How to Invest Wisely

What are savings? To answer this in a very simplistic manner, this is the amount of money that you have left after all your expenses have been paid for. Big or small, any amount of savings over the long-term adds to your financial wellbeing and stability, as well as ultimately feeding into overall economic sustainability. Saving money does not have to be a difficult task; it just requires practice. Once you get into the habit of consistently putting money away, it is possible to save enough for emergencies, retirement, or any other goals you were hoping to achieve. Here are some ideas to boost your savings and transform your financial life through investment. Remember, savings are not the same as investments, but smartly working the two of these in parallel can see great impact.

Lessons from someone wise:

  1. Work with a budget;
  2. Beware of debt;
  3. Maintain a clean bank account;
  4. Belong to a medical aid scheme;
  5. Have a will and life cover for debt; and
  6. Save today to spend tomorrow.

You work hard and expect your money to work even harder. The important question to then ask is, “How do you want it to work for you?” There are tools that are available to help you achieve this, being Collective Investment Undertakings (CIUs) or also known as Unit Trusts.

What are CIUs?

  • CIUs are an investment pool for many investors which allows them to pool their money to purchase various assets such as equities, bonds, listed property and cash
  • Assets are held in trust by a corporate trust
  • The funds are open-ended i.e. investment fund that continuously offers its securities to investors and stands ready to redeem its securities at all times
  • Funds are managed by a  licensed Investment Manager (such as Kgori Capital)
  • Unitised pricing allows for daily valuation
  • There are daily investments and withdrawals
  • Easy access for all investors, large or small

Why invest in CIUs?

  • They are easy and accessible, and you can invest in a Unit Trust for as little as P200 a month (monthly debit order) or a P10,000 lump sum. You have access to your funds in about 48 hours.
  • You always know how much you own, they are in units, you know how many you have and you can check their value as the price is published.
  • Good value. The annual management fees are competitive and are very transparent.
  • Your money is safe as it is held in a trust account – and not by the investment company.

There are a number of ways a Unit Trust can help you increase the value of your money. It can give you income or capital growth, or both. The decisions you take will depend on your specific circumstances, the stage of your life you are in, how much risk you are willing to take on, and so on.

How do CIUs give you growth?

  • We have all heard of the saying, “do not keep all your eggs in one basket.” Unit Trusts spread your risk so the bad performing bumps along the road are ironed out by the better performing assets. This is also known as ‘diversification of investments.’
  • Gains and losses are called investment returns and are made up of asset price increases, dividends paid by companies to shareholders and interest earned from bonds or cash.
  • Unit Trusts are managed by the best of the best: highly qualified, skilled and experienced investment managers, with the time it takes to make the best decisions for the investors.
  • History has also shown that the longer you leave your money in most Unit Trusts, the greater the opportunity for growth.

Unit Trusts are one of the most affordable and simple ways to invest, especially if you do not have the time, interest or knowledge to invest your money on your own. CIUs are highly regulated and have a trustee who is independent to the investment manager. This is key as the trustee acts like the fund’s custodian and ensures that the Unit Trust is managed according to the guidelines laid out in the trust deed.

How to invest

  • Request a copy of the prospectus of the fund, minimum disclosure document or fact sheet and an application form
  • Complete application form with relevant Know your Client (KYC) information, and submit to the investment manager
  • Make a payment in to the fund inflow account
  • Receive welcome letter from the fund manager with account details for future additional investments
  • The fund manager will continuously provide valuation and transaction statements, minimum disclosure documents or fact sheet on the fund, as well as income distribution statements. Online access to view fund details would also be available.

So what are you waiting for? CIUs are a great investment platform for the beginner or the savvy investor and provide a sound means through which to invest your money, and invest in your future. The features and benefits are well-suited to those looking for low-risk investments, as well as a flexible investment vehicle. As Warren Buffet said, “The greatest investment you can make is an investment in yourself……The more you learn, the more you’ll earn.” This means it is paramount that you invest time in learning about this investment opportunity, ensuring your own due diligence, and asking all the questions you need to in order to make an informed decision.

With the recent introduction of Unit Trusts by Kgori Capital, we ensure you have even greater opportunity for a diverse investment portfolio, and are taken care of by a true Botswana business with your interests at heart. This is because Kgori Capital is proudly a home-grown, Botswana-focused investment manager, passionate about Botswana’s growth, and the development of her economy and her people. Simply put, we invest with pride for Batswana, with Batswana, and our Unit Trust option is yet another example of this.