How To Buy and Sell Unit Trusts & How to invest in Unit Trust Fund

To invest in a unit trust you need to buy units by 8pm the day before. The major issue with a Unit Trust is that you are unaware of the price that you are buying at as the price is not set until after you have decided to buy into the trust.

At 8am every working day, new unit prices will be calculated for the funds. This is called the Valuation Point.

The orders received to buy units in the trust are then calculated the following day. This process is called forward pricing.

You can invest in a unit trust on a monthly basis allow it to build up overtime. Funds normally charge a fee when you join the trust but after that you can pay in your monthly amount without charge.

Dual Pricing and Unit Trust.

Unit Trust run on a duel price system. There is a price at which you can buy units in the trust and a different price at which you can sell your units in the trust.

The price at which they are bought is called the offer price and the price at which they are sold is called bid price, this mirrors the way that the underlying stocks are bought on the stock market. The difference between the two prices is called the spread. The offer price includes any buying charges within the fund.

Selling Your Unit Trust

You can sell you investment in a unit trust at anytime, you can sell some or all of your units at the bid price, the bid price is set on the underlying market value of the shares that it contains. The bid price is always lower than the offer price. You sell your units via your fund manager.

Forward Pricing

What Does Forward Pricing Mean?
A Securities and Exchange Commission regulation that requires that investment companies price all of their buy and sell orders of fund shares according to the next net asset value (NAV). This valuation process is for open-end mutual fund transactions in which the mutual fund itself is constantly issuing and redeeming mutual fund shares at the most recent NAV per share.

Investopedia explains Forward Pricing
Forward pricing is implemented when a trade is placed to buy or sell shares of an open-end mutual fund. This occurs because open-end funds only recalculate the net asset value of their mutual fund shares after the market closes each trading day. As a result, any mutual fund order placed by an investor can't be quoted at a previous net asset value price, and must instead be given according to the next computed net asset valuation.

Source:
a. http://www.investopedia.com/terms/f/fowardpricing.asp b. http://hubpages.com/hub/Unit-Trusts