Investing in collective investment schemes (CIS), such as unit trusts and fund of funds (which invest in the units of other unit trusts), provides investors with a secure and straightforward way to access financial markets.

The advantages of these schemes include diversification, cost-efficiencies from pooling resources, and certain tax benefits. A notable tax advantage is that capital gains tax (CGT) is only incurred when investors sell their units in a unit trust.

This allows investors to benefit from changes in asset allocation without triggering CGT, enabling the deferral of tax and the compounding of savings. This makes unit trusts highly effective investment vehicles for achieving an investor’s risk-return objectives.