1. You can start tiny
Direct stocks: Need 10k-20k to buy even 1 lot + diversify.
Unit trust: Start with 1,000 LKR. That 1k gets split across 30-50 companies instantly.
2. Expert does the stock picking
You don’t need to read balance sheets or watch CSE daily. A full-time fund manager handles it. You avoid “beginner mistakes” like buying only 1 hype stock.
3. Instant diversification = lower risk
1 unit trust = 30+ stocks + bonds + T-bills.
If JKH drops 20%, your whole portfolio doesn’t die. 1 bad company = maybe 2-3% hit max.
4. Liquidity + flexibility
Most funds in LK are “open-ended”. Need cash? Sell units today, money in your bank in 2-3 days. No finding a buyer like stocks. FDs lock you for 1 year. Unit trusts don’t.
5. Automatic reinvesting + compounding
Tick “reinvest dividends”. Your profits buy more units automatically. 10k/month for 10 years at 12% = ∼23 lakh. You never touched it.
6. Suits every risk level
| Unit trust type | |
| Risk you want | Money Market Fund. Safer than FD, 8-11% |
| I can’t lose money | Balance Fund.50% stocks 50% bonds |
| High growth, 5+ years | Equity Fund. 80%+ CSE stocks |
7. Less stress, less time
No charts, no news watching, no brokerage calls. Set up a 5k/month SIP and live your life. Best for busy 9-5 people.
But 2 trade-offs to know
1. Fees: ∼1.5-2.5% yearly. Direct stocks = 0% yearly fee after buying.
2. No control: Can’t say “don’t buy LOLC”. Manager decides.
Who should pick unit trusts vs direct stocks?
Pick unit trusts if: You’re new, busy, investing <15k/month, or hate research.
Pick direct stocks if: You enjoy research, investing 50k+/month, want 0% yearly fees.
Bottom line: Unit trusts = investing with training wheels + autopilot. Perfect for beginners to build habit without blowing up.
