Understanding Unit Trusts

May 2, 2026 By: qymmo user

Imagine a group of people who all want to invest but do not have enough money individually to build a large, diversified portfolio. Instead of investing alone, they pool their money together. That pooled money is then managed by professionals who decide where to invest it. This is how a unit trust works.

If you have ever put money into a susu or contributed to a savings group, you already understand the basic idea of pooling resources. A unit trust takes that concept and applies it to professional investing.

How It Works

When you invest in a unit trust, you buy units. Each unit represents your share of the total fund. The fund manager then takes that pooled money and invests it into different financial instruments such as government securities, corporate bonds, money market instruments, or equities.

The value of your units changes based on the performance of those investments. This value is called the Net Asset Value, or NAV. If the investments perform well, your NAV goes up and your units are worth more. If they decline, your NAV goes down.

You can think of it like owning a slice of a large cake. As the cake grows bigger, your slice grows too.

Types of Unit Trusts

Not all unit trusts are the same. Some are designed for safety, while others aim for higher growth. Here are the most common types:

• Money Market Funds: These invest in short term, low risk instruments like Treasury bills. They offer stability and are good for emergency funds or short term goals.
• Fixed Income Funds: These invest primarily in bonds and other interest-bearing assets. They offer moderate returns with lower volatility.
• Balanced Funds: These combine equities and fixed income to balance growth with stability. Good for medium to long term goals.
• Equity Funds: These invest primarily in stocks. They carry more risk but have higher growth potential over the long term.

Why People Choose Unit Trusts

• Professional management: Your money is handled by licensed fund managers who do the research and make investment decisions on your behalf.
• Diversification: Even with a small amount, your money is spread across many different assets, reducing the impact if one investment performs poorly.
• Accessibility: You can start investing with relatively small amounts. Many funds in Ghana accept initial investments as low as GHS 100.
• Transparency: Fund managers are required to publish regular reports showing how the fund is performing and where money is invested.
• Regulation: Unit trusts in Ghana are regulated by the Securities and Exchange Commission (SEC), which provides a layer of protection for investors.

What About the Fees?

Fund managers charge fees for their services. These typically include a management fee (usually between 1% and 2.5% per year) and sometimes an entry or exit fee. These fees are deducted from the fund, so they are already reflected in the NAV you see.

It is important to understand the fee structure before investing. Lower fees do not always mean a better fund, but high fees can eat into your returns over time.

Is It Right for You?

If you want to grow your money but do not have the time, knowledge, or desire to pick individual stocks and bonds yourself, a unit trust is an excellent option. It gives you access to professional management and diversification without the complexity of managing your own portfolio.

For someone new to investing, unit trusts are one of the most practical starting points for building long term wealth.