Both Unit Trusts and Exchange-Traded Funds (ETFs) are popular ways to invest in diversified portfolios in South Africa, but they have key differences. Understanding them helps you make the right choice based on your goals, risk profile, and investment style.
Unit Trusts
- Actively or Passively Managed: Managed by professional fund managers.
- Pricing: Traded at the end-of-day net asset value (NAV).
- Minimum Investment: Often starts from R500 or more.
- Fees: May include upfront and ongoing management fees.
- Flexibility: Suitable for regular contributions and long-term investors.
ETFs
- Passively Managed: Track an index or sector.
- Pricing: Traded throughout the day like stocks.
- Minimum Investment: Can be as low as R10 on platforms like EasyEquities.
- Fees: Generally lower than unit trusts due to passive management.
- Liquidity: More liquid than unit trusts due to stock market trading.
Which Is Better?
Opt for ETFs if you want cost efficiency, transparency, and control over your trades.
Choose Unit Trusts if you prefer hands-off investing with expert guidance and don’t mind slightly higher fees.