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What is a Unit Trust?

A unit trust is a collective investment scheme, which pools contributions from investors with a common investment objective. The pooled funds are then used to purchase a portfolio of financial securities. Depending on the objective of the unit trust, the type of securities to be bought can comprise of: equities (shares), bonds, cash, bank deposits etc. The unit trust portfolio is managed by a professional fund manager, while the assets are held by a bank acting as a custodian.
What's in it for you?

Unit trusts have become increasingly popular because they provide cost-effective access to both the fixed income market and the stock market. An investor is able to diversify risk and tap into some investments that he/she would rather have been unable to access through the expertise of a professional fund manager. There are three types of Unit Trust under the UAP Unit Trust Funds and these are the funds you can invest in: UAP Money Market Fund, UAP Balanced Fund and UAP Umbrella Trust Fund.

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How does it work?

The client deposits money into the custody account, thereby creating a pool of cash-for-investment (the fund). The objective of the funds is to obtain a high level of current income while protecting the investor’s capital and to achieve a reasonable level of current income and offer investors a long term capital gain and preservation. There are three types of Unit Trust under the UAP OM Unit Trust Funds and these are:

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Want to know more about Unit Trusts? We've answered a few questions you might still have about Unit Trusts.

    Depending on the objective of the unit trust, the type of securities to be bought can comprise of: equities (shares), bonds, cash, and bank deposits, etc. The portfolio is managed by a professional fund manager and the other parties in the management of unit trusts include; Trustee, Custodian & Auditors.

    • Local Stock Market - listed shares
    • Treasury Bonds
    • Commercial Papers
    • Treasury Bills
    • Offshore Investments
    • Fixed Deposits

    An investor can purchase units through an investment advisor from UAP Old Mutual Financial Services Limited, upon receipt of proper advice.

    The minimum lump sum investment amount is UGX 100,000 in each of the respective funds. An investor can also choose to make regular top-ups as and when they feel the need to.

    When you invest in a Unit Trust fund, the number of units you will receive is calculated by dividing the investment amount by the offer price at the time of purchase. For example, when you purchase at a price of UGX 1000 and you invest UGX 3,000,000 you will receive 3,000 units. This number of units will be shown in your monthly statement. The value of these units will then change in accordance with the price of the unit trust. The price of the unit trust is dependent on the value of the securities (sometimes called underlying assets) that are bought for the unit trust fund by the fund manager.

    To align your interest and expectations with the objectives of the unit trust fund, you need to consider certain factors before taking the decision to invest. You need to determine what your investment objective is, your risk appetite, your investment horizon and possibly whether you will need the money in the short or long term. It is important to bear in mind that the value of the unit trust will fluctuate in accordance with the underlying investments and any income may go down as well as up.

    Customarily, it is a good idea to invest regularly to take advantage of “cost averaging”. Capital market products such as shares and unit trusts fluctuate in price, sometimes strongly. History shows that it is very difficult for any investor to predict market conditions i.e. to buy units at the lowest price and sell them at the highest price. Therefore, you are more successful if you invest regularly over a long period of time.

    UAP Financial Services unit trust funds provide you with easy access to your money. Normally, your money should reach your account within 2-3 working days upon receipt of the redemption request. You can redeem all or part of your investment at any time. However, we recommend that investments in any fund except the money market fund should be viewed as a medium to longer-term (3 – 5 years), as the nature of the main investment assets within the funds follows a longer-term market cycle.

    Unit trusts are a tax-efficient investment. A unit trust fund does not pay tax on its income, either from dividends or interest. In addition, unit trusts do not pay tax on capital gains.

    The rate of return rendered by a unit trust fund depends on the following factors: Returns from the financial markets, the type of assets within the unit trust portfolio, and the management skills of the fund manager. The value of shares, treasury bonds, corporate bonds, and other asset classes are determined by financial markets and can rise or fall over time. Historical performance does not predetermine future performance.

    For transparency purposes, UAP Financial Services will send monthly reports to your email. The market value of your investment depends on the current price of the unit at a particular period of time. The number of units you have needs to be multiplied with the current price which then gives you the market value of your investment.

    Individuals/Joint Accounts

    1. Copy of identification document(preferrably National ID)

    2. One colour Passport-Sized photo

    3. Copy of recent STAMPED bank statement-last 3 months or cancelled cheque

    4. Proof of residence(Copy of utility bill or LC letter or Residence verification letter)

    5. Investment cheque(Original bank deposit slip in the name of the selected fund)

    1. Copy of Certificate of Incorporation

    2. Copies of signatories identification documents

    3. One colour passport-sized photo of each of the signatories

    4. Copy of recent bank statement not more than 3 months or cancelled cheque

    5. Resolution to carry out the investment on company letterhead 6. Investment cheque(Original bank deposit slip in the name of the selected fund)