A DECISION many investors face is whether to put their capital into a unit trust or mutual fund, or buy into an equivalent scheme offered by an insurance company.
The simple answer is that it depends on your circumstances and future plans.
An adviser should be able to guide you through the pros and cons. Unfortunately, this process does not always take place and you may end up with a recommendation that is not necessarily the best for you.
Most people are familiar with unit trusts or mutual funds. The principle of pooling a number of individual investments in order to create a more diversified portfolio with a full-time manager, is gradually being acknowledged as an effective way of participating in a particular market or region.
Insurance companies operate in a similar manner to unit trust groups in that they offer collective investments to individuals. For the purposes of this article, a collective investment is defined as ''an investment fund in which the savings of a number of individuals are grouped together and managed professionally''.
A number of insurance companies have chosen to use unit trust managers rather than create their own fund management team. One of the most important factors in making your decision is whether you need an insurance company wrapper in addition to your unit trust.
