Unit Trusts

aj9648

Hi

Does anyone know anything about unit trusts

I have about £5K to play with and want to invest it in some sort of fund - one medium risk and one low risk.

Can anyone tell me whether unit trust is a good way of investing and how I can go about doing this ?

Thanks

SeanW

Unit Trusts are collective investments, where a fund manager chooses a number of shares and other investments into the fund. You then buy units in the fund. Some funds are intended to provide an income, others capital growth, and some both. Unit Trusts are categories under sectors, which describe what the funds mainly invest in. Some funds are actively managed, changing the investments when required, others are trackers, which aim to track a particular index by using investments that match the index, with little or no change. These trackers will be cheaper on charges, as there is less work for the fund manager. Some managed funds may just be closet index trackers, with little management.

Unit Trust will have a bid offer spread. You buy at the offer, and sell at the bid. This includes the initial charge. OEICs simplify this, with just one price, with an initial charge taken from the investment. They will also have annual management charges, as well as other expenses.

As these are investments, they can potentially go up or down in value over time.

Unit trusts can be invested within or outside of an ISA, within in ISA you would save on Capital Gains Tax should that apply. You should be looking to invest for 5-10 years minimum.

Its cheaper to invest in Unit Trusts via a fund supermarket or discount broker who will refund most if not all the initial charge (up to 5%) and maybe even some of the annual charge. For example Hargreaves Lansdown http://www.h-l.co.uk/ is such a discount broker.

There are 1000s of unit trusts and OEICs, and you can compare past performance of them and their managers at https://www.citywire.co.uk and https://www.trustnet.com, but of course past performance isn't a guarantee for the future, and a top performer may not match your risk tolerance if its up and down yearly.

2 funds might be a bit low, if you invest in 5 different funds, of differing sectors, it may be more balanced to suit your risk.

dealornodeal_3

You can open an ISA, either a money saving ISA which normally pays a higher Interest than a Bank or Building Society account. Maximum you can pay in per year is £3k.

Or an Isa which can go up and down in value, and is governed by Stocks and Shares. Maximum is £7k per annum!

tom188

I think your missing some ks there dealornodeal

dealornodeal_3

tom188 wrote:

I think your missing some ks there dealornodeal

Apologies and thanks, wouldnt have made much interest would they on that:o