Frequently Asked Questions

What is a unit trust?

A unit trust fund is a professionally managed collective investment scheme that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. A unit trust is constituted under a trust deed. Unit Trust funds are operated by fund managers, who invest the fund’s assets in various securities and attempt to produce capital gains and interest income for the fund’s investors. A unit trust fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.

What is the advantage in investing in Unit Trusts?

One of the main advantages of investing in a unit trust is that the small investors get the access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be quite difficult to create with a small amount of capital. Each investor participates proportionally in the gain or loss of the fund. Units of the fund can be purchased or redeemed when needed at the fund’s current net asset value (NAV) per unit.

What are Investrust Funds?

Investrust Wealth offers four funds for the investors namely; Invetsrust Gilt-edged fund, Invetsrust Growth fund, Invetsrust Income fund and Invetsrust Money Market fund. These fundsare pooled investment vehicles in which the capital contributions of investors combined into a legally formed trust fund. The money is then invested by Investrust Wealth acting on behalf of the investors, in a portfolio of marketable securities. Deutsche Bank is appointed to safeguard the rights and interests of the investors. In return for their investments the investors receive “units” (shares) of the invested funds based on the net asset value and in proportion to the amount of money they have contributed. The income derived by the fund by way of dividends, interests and capital gains from sale of investments is normally divided among the Plan holders in proportion to their investments, in accordance with the distribution policy of the fund. The value of each unit reflects the value of the securities in which the fund is invested.

What are InvestrustPlans?

Investrust plans are special savings schemes designed by Investrust Wealth Management Limited for regular investments. ThesePlans are designed to support investors to address their medium to long term financial needs such as the educational needs of their children, to save for their retirement and other mid to long term financial needs. The specific child education and retirement Plans are designed to support regular savings at an affordable level. The regular savings and professional fund management combined together is expected to help investors to grow their savings gradually with minimal risk levels.

How could I Invest in Investrust Funds or Plans?

Making an investment is very simple. You could obtain an Explanatory Memorandum and an Application Form from either Investrust Wealth or from a Sales Agent. You also can download application forms from the website too. Complete the form and hand over your application along with your cheque drawn in favour of “Investrust Wealth” and copies of identification documents (NIC/ Passport) and address verification documents, to Investrust Wealth by person or by post or to the authorized Sales Agents.

What is the minimum Investment in Investrust Funds and Plans?

Child Education & Retirement Savings Plans

Minimum initial investment of Rs. 10,000/- for a wealth plan and multiples of Rs. 1,000/- thereafter on investors wish when to invest (not applicable for a SIP).

Direct Investment in Funds

    • Investrust Gilt-Edged & Income Funds

Initial minimum investment is Rs. 10,000/- and multiples of Rs. 1,000/-

    • Investrust Equity Fund

Initial minimum investment is Rs. 5,000/- and multiples of Rs. 1,000/-

    • “Investrust Money” Fund

Initial minimum investment is Rs. 100,000/- and multiples of Rs. 10,000/-

What is a Systematic Investment Plan (SIP)?

Systematic Investment Plan is an easy way to save money at regular intervals for those investors who wish to save regularly to build a larger capital to meet their objective.

An investor investing in Child Education or Retirement Savings plan in SIP has the option to start   an account with an initial sum of LKR 1,000/- and contribute not less than LKR 1,000/- investment per month.

How many Units will be allotted to me for the Rs 1,000/- invested in a Plan?

Your total investment (after the front-end fee – if applicable only) will be divided by the offer price applicable to the day for each applicable plan or fund on which you make the payment. If you pay cash it will be on the date of payment and by cheque on the day your funds are credited to Investrust Wealth. It is possible to allot you with fractions of a unit rounded up to one decimal point.

What are the advantages of investing in Investrust Funds and Plans?

  • You will enjoy the services of fund managers who will manage your money at a very reasonable cost.
  • The trust fund holds a large portfolio and this portfolio will carry a wide variety of instruments. This would automatically diversify and reduce the risk of your investment.
  • Investments in unit trusts are hassle free. That means you will save a lot of time, because we do all the work for you. Dividends declared are currently exempt from tax.
  • The administrative details which you would be required to attend normally would be reduced to a minimum.
  • You would enjoy the convenience of withdrawing your investments at any convenient time as Investrust Wealth is under obligation to purchase them back from you. When you are a long term investor for your retirement and child education, please consider carefully before you withdraw for any urgency.

Why should prices of Units fluctuate?

Unit prices fluctuate due to price fluctuations of the Securities owned by the Trust fund, particularly the shares quoted on the Colombo Stock Exchange. The Plans are diversified into different funds and any fluctuation in the share market would be offset by the income from gilt and debt funds. In other words the risk is further reduced to the investors in the Plans.

What is the Role of the Securities & Exchange Commission of Sri Lanka?

The Securities & Exchange Commission of Sri Lanka (SEC) has been created by an Act of Parliament. It is entrusted with the responsibility of protecting the interests of the investors who make investments in quoted securities and in unit trusts. SEC has formulated regulations for the operation of unit trusts and has the power to ensure the proper conduct of the business of unit trusts.

It also has the power to grant a license to a management company to operate a unit trust. It can suspend or cancel such license given, if it is not satisfied that the trustee or the managing company of a licensed unit trust has acted in breach of the provisions of the trust deed, Act or any rules or regulations made by the SEC under the Act.

Why shouldn’t I invest directly in the Stock Market instead of handing over my funds to a Unit Trust Fund?

Many investors do not have the necessary information, technology, time or the expertise to manage their own investments. On the other hand the fund management company has in its employment professional managers who have the necessary experience to manage your funds. Especially for a small investor it is much more beneficial to use the services of a professional as the Manager through the Plans making your investments without such help. In addition you enjoy the benefit of investing in a diversified portfolio. The Plans are introduced to smoothen out wide fluctuation and to benefit in the longer term when the equity market performs on the upside.

How are the prices of Unitsand Plans determined?

The prices of units are determined by dividing the net asset value of the deposited property by the number of units deemed to be in issue on a particular date. The value of the deposited property will be arrived at after deducting charges payable by the fund and adding accrued income. The Plan value will be the average of the units held under each unit trust at different proportions.

What is a Risk?

When you make an investment, there is a possibility that the value of your investments will go down or remain unchanged over time. Some investments are more risky than others. Generally, the more risk you’re willing to take, the greater your opportunity for reward over the long term.

There’s no simple formula to follow to determine how much risk is worth taking; only you know how much or what kinds of risks you’re comfortable with. What’s more, your willingness to accept certain levels of risk will probably change during your lifetime.

Start to determine your comfort level with risk by asking yourself two questions:

  1. What are my retirement goals?

The more specific you are, the easier it will be to determine the level of return you’ll need and the level of risk you’ll need to accept to potentially reach those goals.

  1. When do I want to retire?

If retirement is a long way off, you might consider more aggressive investments. A span of several years gives you the opportunity to ride out the ups and downs of a number of market cycles. But if you’re close to retirement, you might want to shift to investments with lower risk. In either case, talk to a financial professional to see what makes sense for your situation.

Next, you’ll need to evaluate your investment options. Most investments fall into one of three broad categories:

Stocks funds — historically, these have offered the highest potential reward but tend to have the highest risk and are more appropriate for long-term investors.

Bonds funds — these typically present less risk than stocks but generally have less growth potential than stocks.

Cash equivalents — this category includes government securities or stable value funds and offer the least volatility. Investors generally use them to help preserve what they’ve invested.

Dealing with risk

Losing money is an obvious risk with any investment, but there are others you may not have considered:

Risk of inflation

Inflation eats away at the value of a Rupee. If your investments don’t keep pace with the rising cost of living, you’ve lost buying power. Over the past 20 years, the inflation rate has averaged around over10 %. Among the types of investments covered here, only stocks and bonds (or funds investing in them) have consistently surpassed that rate over the long term.

If you are a conservative investor or will be retiring soon, you may be attracted to cash-equivalent investments. Consider including enough stock or bond fund investments to keep you from falling behind rising costs. Keep in mind that much of your investment portfolio might still have a 10- to 30-year time horizon once you retire.

Market risk

Another word for market risk is volatility. Volatility makes it more likely you could lose money if you need to sell your investment in the near future.

One way to address market risk is to diversify your investments and to continue contributing regularly over a long time period. There’s no guarantee that putting your money in a variety of investments will eliminate risk, but it has helped in the past.

Merits of diversification

By including a mix of stock and bond funds for your portfolio, gains in one or more of your investments might balance or offset losses in the others.

Riding out cycles

Investing over the long term won’t guarantee you a profit or prevent you from losing money, but making a regular fixed-rupee investment (called rupee cost averaging) can help compensate for the natural up and down cycles in the market. Because the prices of unit funds fluctuate, rupee cost averaging allows you to buy more shares when prices are lower and fewer shares when prices are higher. As a result, it can lower your average cost per unit. Before using this strategy, though, make sure to consider your willingness to continue investing while share prices are declining.

Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the Explanatory Memorandum which could be obtainedfrom Investrust Wealth Management Limited and Agents of Investrust Wealth or download from our website and should be read carefully before investing.

Who is a Trustee in a Unit Trust?

A Trustee in a unit trust operation will always be a reputable financial organization who will be appointed under a deed of trust to look after the interests of the unit holders as it is not possible for every unit holder to look after his own interests. The trustee’s role is mainly to exercise due diligence and vigilance over the management company with the objective of safeguarding the interests of the unit holders. Apart from being the legal owner of the fund’s assets the trustee is responsible to ensure that the fund managers perform their obligations in accordance with the trust deed. Deutsche Bank AG Colombo, will be the Trustee for all three funds managed by Investrust Wealth.

Who could invest in Unit Trusts?

  • Citizens of Sri Lanka who are residents within Sri Lanka and are above 18 years of age. (Severally or jointly)
  • Minors as the first holder when applied jointly with parents, legally appointed guardian or curator.
  • Companies, Corporations, or Institutions incorporated or established within Sri Lanka.
  • Approved Provident Funds and approved contributory pension schemes registered/incorporated/ established in Sri Lanka.
  • Sri Lankans who are residing outside Sri Lanka.*
  • Foreign nationals, whether resident in or outside Sri Lanka.*
  • Foreign institutional investors and companies with limited liability or other corporate bodies established or incorporated outside Sri Lanka.*
  • Global, regional and country funds approved by the SEC.

What are the Tax benefits available?

Investors in an approved unit trust will enjoy the following benefits:

  • All dividends distributed are exempt from tax in the hands of corporate and individual investor.
  • Income from realization of Units is tax exempted.

The above tax benefits are based on the provisions in the income tax law as on 20thJuly 2012. Please consult your tax advisors for applicability at the time of your investment and thereafter.

What is the role of the Fund Management Company?

The Fund Management Company (FMC) is the entrepreneur who develops the unit trust fund . They identify a reliable financial institution as a trustee and execute a trust deed with them and obtainslicence to operate the trust from the Securities and Exchange Commission of Sri Lanka.

FMC will always be responsible for the promotion of the unit trust and investing the funds of the trust under the supervision of the trustee and subject to monitoring by the commission. The important function of the management company is to allocate resource from one investment to another when it seems appropriate in the interests of the investors in the unit trusts.

What is the role of the Trustee?

A Trustee in a unit trust operation will always be a reputable financial organization who will be appointed under a deed of trust to look after the interests of the unit holders as it is not possible for every unit holder to look after his own interests. The trustee’s role is mainly to exercise due diligence and vigilance over the management company with the objective of safeguarding the interests of the unit holders. Apart from being the legal owner of the fund’s assets the trustee is responsible to ensure that the fund managers perform their obligations in accordance with the trust deed. Deutsche Bank AG Colombo, will be the Trustee for all three funds managed by Investrust Wealth.

How often will I get to know the Performance of the Fund?

You will receive Manager’s report once in every six months and it will contain details of the fund and its performance. You will also receive a copy of the annual audited report and accounts of the fund every year. The Managers Report would be published on a regular basis on the website.

Further, the unit prices of the funds are available on daily newspapers published within the country.

Will Investing Money in the Unit Trust be more beneficial than investing on my own?

Yes, there are clear advantages:

Professional Management

You have access to professional fund managers who backed by fundamental research study the market daily to select the best investments and decide whether to buy, sell or hold what has been acquired to obtain the maximum benefit for you.

Lower Risk

Funds are invested over a wide range of carefully selected shares, securities and money market instruments thus reducing the risks inherent in a single investment. This is referred as portfolio diversification.

A stake in “blue chip” companies

Investments that give you a stake in some of the country’s biggest companies become possible because of the strength of the collective resources available to the trust.

Can I apply jointly for Fund or Plan Investment?

Yes you can apply yourself or jointly with one other person. In joint applications both persons have to sign the application. In Child Education Plan you can register your child together with the parent/guardian.

I am a Non-Resident Sri Lankan; Can I buy Units in Investrust Funds?

Yes. Nonresident investors can invest in unit trust funds

  • Foreign nationals, whether resident in or outside Sri Lanka.*
  • Foreign institutional investors and companies with limited liability or other corporate bodies established or incorporated outside Sri Lanka.*

are now permitted to invest in unit trust without coming through SIA account.

Why choose Private Portfolio Management?

You will have the security of being able to have your assets under the custody of a preferred trustee and peace of mind by them being managed by the skilled team at Investrust Wealth who will help you select the right portfolio strategy to meet your risk tolerance and financial needs.

You have the confidence of knowing that the investment approach you have chosen is managed according to clear objectives aligned to your needs as there are stringent regulations in place along with regular detailed reporting.

What is the process involved in maintaining a private portfolio?

The team at Investrust Wealth manages your portfolio according to the asset allocation strategy or a clearly defined set of investment rules designed according your risk appetite, investment horizon and financial needs. The investment process offers multiple sources of investment performance, with constant monitoring and managing of risk. They are ready to respond and adapt to changing markets through their choice of asset classes and sectors – while keeping you informed.

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