A unit trust investment in Kenya is a type of collective investment scheme where
investors pool their money together and the funds are managed by a professional fund
manager. The fund manager uses the pooled money to invest in a variety of assets, such
as stocks, bonds, and real estate.
When an individual invests in a unit trust, they are issued units in proportion to the
amount of money they have invested. The value of these units varies depending on the
performance of the underlying assets in the fund. The fund manager will buy and sell
assets in the fund in order to make a profit for the investors.
In Kenya, unit trusts are regulated by the Capital Markets Authority (CMA) and must be
offered by a licensed fund manager. There are different types of unit trusts available,
including equity funds, bond funds, and money market funds, each with its own
investment objectives and risk profile.
An individual can invest in a unit trust by buying units in the fund through a licensed
financial institution or a stockbroker. The minimum investment amount varies
according to the fund.
One of the benefits of investing in a unit trust is that it allows individuals to gain
exposure to a diversified portfolio of assets that they may not be able to access on their
own.
Additionally, unit trusts are professionally managed and can provide a higher return on
investment than traditional savings accounts.
However, it is important to note that the value of the units can fluctuate depending on
the performance of the underlying assets, and as with any investment, there is a risk of
losing money.
When investing in a unit trust, it is important for an individual to do their due diligence
and research the fund and the fund manager before making a decision.
They should also be aware of the fund’s investment objective, the types of assets it holds,
the risk level, and the fund’s past performance. Additionally, it is important for the
investor to consider their own investment goals and risk tolerance before investing in a
unit trust.
It is also important to note that unit trusts typically have fees associated with them, such
as management fees and performance fees. These fees can cut into the return on the
investment, so it’s important for the investor to know what fees the fund has and
consider them when deciding whether or not to invest.
Another important aspect to keep in mind is that unit trusts are long-term investments,
and it is not advisable to withdraw the money frequently. The prices of the units can
fluctuate in the short term, and the investor may end up selling at a loss.
