Investment comparison
There are significant differences between pooled investments such as unit trusts (UT’s) and private share portfolios (PSP’s). PSP investing involves a bespoke investment portfolio in which shares and other securities are held in the client’s name, and are bought and sold on behalf of the individual client by the asset manager. The asset manager will invest directly in the market and will avoid investing through middlemen, like unit trusts.
Asset allocation and share selection within the portfolio can be customised to suit the client’s precise risk-return objectives. This may range from equity-only portfolios through to more conservative portfolios focused on giving investors a high-income yield. A PSP can also exist within a wrapper such as a retirement annuity or preservation fund.
Below we highlight some of the key differences between Private Share portfolios and Unit Trusts:
Portfolio can be tailored to individual’s unique needs and risk-return objectives.
Each client receives the same UT. See-through analysis and effective diversification remains difficult.
More meaningful exposure to less liquid smaller cap shares in a smaller segregated portfolio. Asset allocation shifts, which historically explain 80% of outperformance, require a high level of agility.
Agility is often lost to UT’s due to their larger size.
Investors can exit a PSP at any time. There are no exit penalties, but CGT must be paid. For PSP’s the R40,000 CGT annual exclusion is used every year. The annual exclusion cannot be rolled over to the next year – it is a “use it or lose it” benefit. Unlike a UT, there will not be a single massive CGT shock when you exit a PSP.
Unit trusts are typically mass-market retail products where investors have pooled their resources together to buy into a predetermined diversified portfolio. PSP’s are smaller boutique-style wholesale products held in a client’s name.
Cutting edge Investing
Get in touch with our team to find out more about our Private Share Portfolio and Unit Trust options.
Advisory Services
We offer advisory services on estate planning, trust structuring, money market options and foreign exchange assistance. Learn more
Market Report
We prepare monthly reports containing insights into indexes, markets and global events that may affect your investment.
