Unit trusts
Unit Trust Investments in South Africa
Independent investment guidance for decisions that deserve a considered plan.
A unit trust — a pooled, professionally managed fund — is a practical way to access a diversified range of investments without having to select and manage each underlying asset yourself. Unit prices move with the assets the fund holds, so returns are never guaranteed and can rise or fall over time.
What is a unit trust?
A pooled fund, managed on your behalf
Investors pool money
Many investors contribute to the same fund, which gives access to a diversified spread of assets that would be harder to build alone.
A professional manager invests the portfolio
A fund manager makes the day-to-day investment decisions within the fund's stated mandate.
Investors own units
Your contribution buys units in the fund, and the unit price reflects the value of the underlying assets.
The fund follows a stated mandate
Each fund discloses what it may invest in, its risk level and its objective — read this before investing.
Returns are not guaranteed
Unit prices move with markets, so the value of your investment can go down as well as up.
How unit trusts work
From your contribution to the underlying assets
Investor contributions
You invest a lump sum, a monthly amount, or both.
Pooled fund
Your money joins that of other investors in the same fund.
Fund manager
A professional manager decides which underlying assets to hold, within the fund's mandate.
Underlying assets
The fund holds a mix of assets such as cash, bonds, property or equities, depending on its mandate.
Unit value
The price of your units rises and falls with the value of the underlying assets.
Types of unit trust funds
Different mandates suit different goals
Money-market funds
Lower-risk funds investing in short-term cash instruments.
Income funds
Focused on generating regular income from interest-bearing assets.
Bond funds
Invest mainly in government and corporate bonds.
Balanced funds
A blend of asset classes managed to a moderate risk level.
Equity funds
Invest mainly in shares, with higher potential volatility.
Global funds
Provide exposure to markets and companies outside South Africa.
Multi-asset funds
Combine several asset classes within one fund, rebalanced by the manager.
Choosing a suitable unit trust
What to weigh up before you invest
Choosing a fund isn't about finding the "best" performer — it's about finding what's suitable for your goal, time horizon, risk profile and mandate preferences. Consider your investment goal, time horizon, risk profile, the fund's mandate and asset allocation, its fees, historic performance in context, the fund manager's consistency, and how the fund fits into your overall diversification.
Unit trusts compared with other investments
How unit trusts sit alongside other options
| Investment | Typical characteristics |
|---|---|
| Unit trusts | Pooled, professionally managed, priced once daily, wide range of mandates and risk levels. |
| ETFs | Pooled and diversified like a unit trust, but traded on an exchange throughout the day, often tracking an index. |
| Fixed deposits | A set interest rate over a fixed term, generally lower growth potential and limited access before maturity. |
| Direct shares | Ownership of individual companies, requiring more research and carrying concentration risk unless well diversified. |
| Retirement products | Tax-advantaged vehicles, such as a retirement annuity, designed specifically for retirement saving with access restrictions before retirement. |
No single option is universally best — the right combination depends on your goals, time horizon, tax position and risk profile.
Costs and fees
What you may pay, made explicit
| Cost type | What it covers |
|---|---|
| Management fee | Charged by the fund manager for running the underlying portfolio. |
| Adviser fee | Ongoing advice, planning and reviews with your Mbalwa adviser. |
| Platform fee | Administration of the investment platform on which the fund is held. |
| Transaction cost | Costs incurred when the fund buys or sells underlying assets. |
| Total investment charge | A combined figure, where disclosed, reflecting the overall cost of the fund and platform together. |
Who may consider unit trusts?
A wide range of investors, for different reasons
New investors
An accessible entry point into diversified investing.
Monthly investors
Building a habit through a recurring debit order.
Lump-sum investors
Investing a bonus, inheritance or other windfall.
Parents investing for education
Growing capital toward future school or tertiary costs.
Investors seeking offshore exposure
Accessing global markets through rand-denominated feeder funds.
Retirees using discretionary portfolios
Structuring accessible capital alongside dedicated retirement income.
How Mbalwa assists
Support at every stage of fund selection
Fund research
Comparing mandates, managers and risk levels against your goals.
Risk assessment
Establishing what level of volatility is appropriate for you.
Portfolio construction
Combining funds into a coherent, diversified strategy.
Fee review
Making sure charges are transparent and reasonable for what you receive.
Ongoing monitoring
Tracking whether funds continue to perform their intended role.
Rebalancing
Adjusting the mix as markets move and your circumstances change.
Unit trust values can rise or fall, and past performance is not a reliable indicator of future results. Please verify current tax and fee figures with your adviser before making a decision.
Frequently asked questions
Questions about unit trusts
No investment is entirely without risk, and unit trusts are no exception — unit prices move with the underlying assets they hold. Lower-risk fund types, such as money-market funds, tend to be more stable than equity funds, but none can be described as risk-free.
Yes. Because a unit trust's value moves with its underlying assets, it's possible to get back less than you invested, particularly over shorter periods or in higher-risk funds. This is why time horizon and risk profile matter before choosing a fund.
Minimums vary by fund manager and platform, and many allow a monthly debit order alongside or instead of a lump sum. A Mbalwa adviser can point you to options that suit your starting amount.
Most unit trusts are open-ended and allow withdrawals within a few working days, which is one reason they suit investors who value flexibility. Some fund types or platforms may apply notice periods or exit terms, so it's worth checking before you invest.
Generally yes — interest, dividends and capital gains within a discretionary unit trust investment may attract tax depending on your personal circumstances. Tax treatment differs when a unit trust is held inside a retirement or tax-free vehicle, and your specific figures should be confirmed with a tax professional.
Both pool investor money into a diversified portfolio, but a unit trust is priced once a day and bought directly from the manager, while an exchange-traded fund (ETF) trades on a stock exchange throughout the day like a share. Each has its own cost structure and practical trade-offs.
There's no fixed number — what matters more is whether your combined holdings are genuinely diversified and free of unnecessary overlap. Holding many similar funds can create duplication rather than real diversification.
Look beyond the headline management fee to the total investment charge, which combines management, platform and transaction costs where disclosed. A Mbalwa adviser can help you compare these consistently across funds you're considering.
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Written and reviewed by Wenzile Mthiyane, CFP®, Key Individual, Mbalwa Investment Services (view profile) · FSP 55090 · Last reviewed 1 July 2026