Investors are allocated units, based on the daily issue (buy) price and the amount they invest. Each unit is an equal share in the trust’s investments. The unit price is determined by the value of the investments and can rise or fall depending on market forces.
Fluctuations in exchange rates also affect the prices of units in trusts with exposure to overseas investments.
The unit prices of the trust are usually calculated daily to reflect the total net value of all investments held on that day.
The initial buy price is marginally higher than the repurchase (sell) price on any given day and reflects the costs associated with investment transactions.
Ideally, over time, investors want the sell price to exceed their initial buy price showing a positive return. This is referred to as capital growth.
The number of units allocated to an investor is worked out by dividing the money invested in the fund, after paying any entry fees, by the unit buy price on the day of investment.