(02) 9387 4300 , Level 16, Westfield Tower 2, 101 Grafton Street, Bondi Junction NSW 2022 AUSTRALIA
Weighing up unit trusts

Weighing up unit trusts

Weighing up unit trusts

Unit trusts are a way of holding assets and are most commonly used as a form of investment strategy.

A unit trust is a particular type of trust that allows individuals to pool together their resources to improve their investment leverage. Each unit trust will have a trustee that decides how the money and where the money is invested in order to generate wealth for unit holders.

There are a number of advantages and disadvantages of investing into a unit trust that ought to be considered.

Advantages

  • Less risk involved in investing due to the diversifition of where the units are invested.
  • The trustee is responsible for making expert decisions as to where units are invested.
  • Due to the pooling of resources, there are far more opportunities to invest in areas that would not be possible as an individual investor.
  • If one unit holder comes into debt, they cannot use assets from the trust to satisfy their debt as the trustee has power over said assets.

Disadvantages

  • Fees associated with investing into a unit trust are comparatively higher than investing directly.
  • Revenue losses or capital losses cannot be offset against other assessable income of trust’s unit holder.
  • When assets are transferred into the trust, capital gain cannot be deferred through any kind of CGT rollover relief.
  • Investors may feel they have limited control due to a trustee making the investment decisions.

Share This:
Mast3R

Newsletter Signup

CONTACT INFORMATION

Level 16, Westfield Tower 2, 101 Grafton Street,
Bondi Junction NSW 2022

02 9387 4300

gpapas@oraclepartners.com.au