How do you gauge the performance of a unit trust?
Ideally, to analyze a unit trust, you need to look at its historical performance for the past 3 to 5 years.
Some unit trusts may not even have a record of performance of 3 years or more, but it is still good practice to ask yourself these questions before investing in them.
1. How has the fund performed among its asset class?
If it is an equity fund, is it out-performing the market index? If it is a bond fund, is it out-performing other bond-based investments?
2. How has the fund performed compared to other similar funds?
You should compare a unit trust against other similar funds (eg. equity fund against other equity funds, or bond fund against other bond funds, etc). Over the time period you are using, the fund you are analyzing should have ideally out-performed most of the other similar funds.
3. What are the expected returns?
What returns does the fund or its representatives forecast? Are they realistic? And how close have they been to achieving these rates of return in the past?
If you need more advice on investing in unit trusts, do contact your trusted FLA Organization financial planner today!
