A Survey of Unit Trusts in Singapore

Publication Type

Journal Article

Publication Date

1999

Abstract

This article presents a survey of unit trust in Singapore. A unit trust is an investment vehicle that pools money from numerous investors to invest in a portfolio of shares, bonds, deposits and other risky instruments. In unit trust investments, the decision on which securities to purchase or sell is delegated to a professional fund manager. Like mutual funds in the U.S., Europe and Japan, unit trusts are open-ended funds. This means that the capital of a unit trust is lot fixed but grows and shrinks with the demand of investors. When there are more purchases of units by investors, the capital. of the unit trust expands. On. the other hand, when investors redeem their investments in unit trusts, the capital base of the unit trust shrinks. Income funds are at the other extreme. Their primary objective is to provide investors with a steady stream of income. To achieve this objective, income funds invest mainly in high quality bonds, bank deposits, and high-dividend yield stocks of well-established blue chip companies. Unlike growth funds, income funds offer a stable but low expected return by assuming low risk. As their name indicates, balance funds invest for both income and capital appreciation.

Discipline

Business

Research Areas

Finance

Publication

Singapore Management Review

Volume

21

Issue

1

First Page

49

ISSN

0129-5977

Publisher

Singapore Institute of Management]

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