General

What are unit trusts?

Unit trusts (or mutual funds) may be an attractive medium-to long-term investment tool for some investors as they give investors the opportunity to diversify even a small investment in securities, bonds, currencies and commodities in markets around the world. If you invest in a unit trust or fund, your money is pooled with money from other investors and invested in a portfolio of assets according to the fund's stated investment objective and investment approach. This range of investments is called a portfolio.

A unit trust is a fund which adopts a trust structure; not all funds use a trust structure. In Singapore, local and foreign funds offered to retail investors are regulated as collective investment schemes. The unit trust or fund is managed by a fund manager.

Are Unit Trusts suitable for me?

Investing in funds may not be for everyone. For example, they may not be suitable for you if you:

  • Want potentially higher returns but are not prepared for variable returns which include the risk of losing a substantial part of the money you invested.
  • Do not understand how returns are calculated or are unclear about the factors and scenarios that can affect returns; do not understand a fund's investment objective, strategy or approach.
  • Do not understand the risks associated with the fund. Some funds use financial derivatives to hedge risks and/or to improve performance. Investors should be aware of the risks associated with the use of financial derivatives, including the risk that the provider (or counterparty) of the financial derivatives defaults.
  • Are not prepared to have your money tied up for long periods of time. As funds are exposed to market ups and downs, investors who stay invested long enough may be better able to ride out the downturns. For this reason, you should have adequate financial resources so that you won't have to liquidate your funds during a market down turn if you need the money at short notice. If you need to convert your investments to cash in the short-term to meet specific needs, some funds may not be suitable for you.
  • Are not familiar with the fund manager and fund's track record.

Why invest in Unit Trusts?

  • Diversification. You spread your investment across a diverse portfolio. This is usually safer than investing in a single share. Of course, levels of risk and return also vary among different funds.
  • Economies of Scale. With a large number of investors contributing to a single fund, operating costs and commissions can be amortized. Individual investors thus pay lower fees.
  • Professional Management. Fund managers spend their working lives researching and managing investments. It would be very difficult for an individual to have an in-depth knowledge of markets around the world. With a unit trust, their expertise is working for you.
  • Easy to start up. Generally, you can start investing with as low as SGD1,000.
  • Liquidity. You can buy and sell unit trusts on any dealing day (except on public holidays in the countries to which your fund is linked). Your money need not be tied up for a specific period of time. Some unit trust products are linked to the index options listed on the various stock exchanges or sometimes to currency options. They can be slightly riskier than more diverse funds, but they're likely to offer a greater return on your investment.
  • Access to Worldwide Markets. Your money can be invested in overseas markets, which may not be easily accessible by individuals.

What should I be aware of before I invest?

  • Determine your risk-level. Generally higher returns are associated with riskier products and that means there's always the risk of losing a substantial part of the money you invested.
  • Make sure you understand how the returns are calculated. If you don't know the factors and scenarios that could affect your return, or if you don't understand the unit trust's objective, it's probably not right for you.
  • Make sure you understand the risks. Some unit trusts use financial derivatives to hedge risks or improve performance. If that's the case, you should fully understand the risks associated with the use of financial derivatives, including the risk of the derivative provider (or counterparty) defaulting.
  • Get familiar with the fund manager and the fund's track record.

How can I invest in Unit Trust?

  1. If you have an existing UT investment account and access to HSBC Online Banking:
    1. You may conveniently place your orders 24/7 through Wealth Dashboard via HSBC Online Banking. Please note that there is a cutoff dealing period of before 3.30 p.m.
    2. Orders placed at any time on a non-business day will be processed on the next business day.
  2. If you have an existing UT investment account but no access to HSBC Online Banking:
    1. Refer to the HSBC Online banking FAQ here.
  3. If you do not have an existing UT investment account:
    1. Speak to your relationship manager at our branches OR
    2. Submit an online enquiry here.

What are the ways to invest in Unit Trust?

  • Lump Sum investment. Make a one-time investment on a fund and take immediate advantage of the market situation.
  • Regular Savings Plan. Make regular smaller sized investments on a monthly basis on a selected fund to ride out the volatility of the market, this is known as dollar cost averaging.
  • CPF Investment scheme. Invest the savings in CPF account in selected funds.

What are the prerequisites to investing in Unit Trust?

You need to have the following:

  • An active investment account with HSBC
  • An active SGD deposits account with sufficient funds
  • Undergone the Customer Knowledge Assessment (CKA)

What are the criteria set for Customer Knowledge Assessment (CKA)?

Below are the 3 criteria set for the satisfaction of CKA. To fulfill or "pass" the CKA, you need to satisfy just ONE of the following criteria.

  1. Investment Experience
    1. Have at least 6 transactions in unlisted Specified Investment Products (unit trusts or investment linked products) in the last 3 years;
  2. Working Experience
    1. Have a minimum of 3 consecutive years of working experience* in the past 10 years in the development, structuring, management, sale, trading, research and analysis of investment products or the provision of training in investment products. (Work experience in accountancy, actuarial science, treasury or financial risk management is also considered relevant experience).
      Support functions in the above-mentioned areas that are administrative or clerical in nature will not be considered as relevant experience.
      *Such working experience would also include the provision of legal advice or possession of legal expertise on the relevant areas listed in 2.
  3. Education Qualification
    1. Have a diploma or higher qualification in relevant courses like accountancy, actuarial science, business, capital markets, commerce, economics, finance, financial engineering, financial planning, computational finance and insurance; or 
    2. Have a professional finance-related qualification. Examples of this would include the Chartered Financial Analyst Exam conducted by the CFA Institute, USA and the Association of Chartered Certified Accountants (ACCA) Qualifications.

How often will I need to go through the CKA? How long is a "pass" valid for?

If you are assessed to have fulfilled the requirements of the CKA, the positive outcome will be valid for one year from the date of your assessment. On the expiry date, we will need to conduct a new CKA before allowing you to continue your usual online transactions with HSBC. To renew your CKA, you may access “Document Centre” via the “Wealth Dashboard” in your HSBC Online Banking.

If you do not meet the requirements of the CKA, you may need to contact our HSBC Call Centre or Relationship Manager.

What does it mean if I do not fulfill the requirements of the CKA? Will I able to place online transactions?

You will not be able to execute online purchases (including switches and Regular Savings Plan applications) yourself. If you wish to invest, investment advice must be provided to you by our Financial Consultants on whether the unlisted specified investment product(s) are suitable before you can proceed with the purchase.

If you are a new investor or need a second opinion to your current portfolio, you can contact our Relationship Manager and they will support you on portfolio review and construction.

How can I get more information / help on investing in Unit Trust?

Do I need to have a local SGD bank account to open an investment account with you?

Yes, it is compulsory to open a local HSBC SGD or Everyday Global Account should you wish to open an investment account with us. The benefit of having a local SGD bank account is that you are able to update the Direct or Credit Instruction to enable us to deposit your cash redemption proceeds to your designated bank account directly.

If I am looking to buy funds, can I use my HSBC SGD bank account as my settlement account?

If the funds are SGD funds, you may use your HSBC SGD bank account as your settlement account.

However, if the funds are not in SGD, you will need a HSBC foreign currency bank account in the fund’s respective currency as the settlement account. For example, if the funds are required to be funded in USD, you will need a HSBC USD foreign currency account. To open a foreign currency account, simply login to your HBSC Online Banking with your security token to open an Everyday Global Account in 11 currencies. 

Can I cancel my unit trust placement?

Yes, you may cancel your unit trust order before 3.30pm for placements done on the same day. Simply click into “Wealth Dashboard” on your HSBC Online Banking, access “Funds” homepage under “Invest Now” and click on “order Status” on the top right of the page.