Unit Trust – a way to avoid pump and dump
Unit Trust, a form of collective investment, is an ideal way for small investors to invest for their future without getting burnt in pump-and-dump situations in the share market, a top money market specialist says. “Small investors are people who earn their living engaged in activities not related to the financial arena. They are aware that investing is important for them, but they lack the know-how to make the correct decisions.
For people who are not capable or reluctant to research and analyze investment markets and climates on their own, unit trusts are a good way to invest without getting caught to pump-and-dump situations ,” Ruwan Perera, Secretary Unit Trust Association, told the Business Times. At the meeting that stock market industry had with President Mahinda Rajapaksa recently, it emerged that unit trusts are an ideal option for retailers.
Most small investors do not have the amount of money to buy a wide range of investments and by investing in unit trust, small investors can own units of a portfolio that comprise many investments, according to Mr. Perera. The unit trust investors are protected from volatility through the bigger number and wider range of stocks in the unit trust portfolio.
Mr. Perera said that this is a long term way to making money. “But Sri Lankans are more used to short term gains or investing their money in financial institutions,” he explained, adding that unit trusts are one of the best ways for retailers to come out of their current difficult situations they have encountered in the share market.
He said that in order to maintain a portfolio of stocks in the share market, a person has to keep himself up-to-date with market information and climate. “For many people, this is difficult, time consuming and expensive. By investing through unit trusts, they transfer the stress of investing to people who are better equipped to look after their investments. These are the professional fund managers,” he added.
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