How Unit Trust Investments Work
Unit trusts pool contributions of many investors into one large fund (pooled fund) which can then be invested in various financial products, including money market, treasury and corporate bonds, shares and property. These funds provide a good investment option due to the nature of “collective investments", which benefit from the expertise of fund management that diversifies money and lowers the risk of losing money.
There is no limit to the amount you can invest within the fund. Unit trusts are licensed by the Capital Markets Authority of Uganda under the Collective Investments Schemes Act of 2003, and an independent trustee who is the registered holder of the scheme’s underlying assets. This is typically a commercial bank.
Advantages Unit trusts offer the investor:
Quick access to funds (liquidity: with a unit trust investment, one can access their funds any time they wish to).
Diversification of investments
Excellent returns
Expert decision making
Flexible and affordable investment
Cash withdrawal facility
Professional investment input in the creation of investment value
Lower/minimal investment costs
- An Example of an investment of Ugx 35m in a Unit Trust: (Monthly Projections)
| # | Month of the Year | Projections: Compounding |
| 1 | January | 35, 322,260 |
| 2 | February | 35, 647,486 |
| 3 | March | 35, 975, 707 |
| 4 | April | 36, 306,951 |
| 5 | May | 36, 641, 244 |
| 6 | June | 36, 978,615 |
| 7 | July | 37, 319, 093 |
| 8 | August | 37, 662, 705 |
| 9 | September | 38, 009, 481 |
| 10 | October | 38, 359, 450 |
| 11 | November | 38, 712,642 |
| 12 | December | 39,069, 085 |
Notes: The Investment of Ugx 35M will fetch a monthly compounding interest on savings calculated on both the initial principal and the accumulated interest from previous savings. Therefore on a rate of 11% interest Per Annum, the compounding Interest a Ugx 35m Investment would attract is UGx 4,069,085 to Ugx 39,069,085 at the end of the 1st year (12 Months).