What are unit trusts and share portfolios?
Unit trusts and share portfolios let you build wealth outside a retirement fund, with the freedom to choose what you hold and to sell when you need the money.
A unit trust pools money from many investors into one fund, run by a professional fund manager. You buy units in the fund. Each fund has a stated aim, from money market funds that behave like cash to funds that hold mostly shares, in South Africa, abroad or both. Unit trusts are collective investment schemes, regulated under the Collective Investment Schemes Control Act and supervised by the FSCA.
A share portfolio holds shares in individual companies, bought through a stockbroker or platform and held in your name. It can hold shares listed in South Africa, shares listed on stock exchanges abroad, or both. Holding both spreads your money across more companies, industries, currencies and markets, but international shares also bring currency risk.
What is an investment platform?
An investment platform, also called a LISP (linked investment service provider), holds your investments in one place. You can choose funds from different managers, switch between them and see everything on one statement. Many platforms also offer tax-free savings accounts, retirement annuities, endowments and living annuities.
How are they taxed?
Outside a tax-free savings account or a retirement fund, you pay tax on what your investments earn. For the 2026/27 tax year:
- Interest is taxed at your marginal tax rate (the rate on your next rand of income), after an annual exemption of R23,800 if you are under 65, or R34,500 if you are 65 or older.
- Dividends from South African companies have dividends tax taken off before they are paid to you.
- Capital gains are taxed when you sell or switch. The first R50,000 of your net gains each year is excluded, and the most you will pay is an effective 18%.
What does it cost?
Expect up to three layers of cost:
- the fund’s own charges, shown as a total investment charge (TIC);
- a platform or administration fee; and
- an advice fee, if you use an adviser.
Share portfolios also have brokerage costs on each trade. Ask for all costs in rand and as a percentage, so that you can compare them.
Things to know
- Unit trusts are generally medium- to long-term investments. Their value can go down as well as up, and past performance is not a reliable guide to future performance.
- You can usually sell your units when you need the money, but they may be worth less at that time.
- Money you will need in the next year or two is usually better in a money market fund than in funds that hold mostly shares.
- Investments held abroad, or that follow offshore markets, carry currency risk. A weaker rand raises their rand value, and a stronger rand lowers it.
Who it suits
Unit trusts and share portfolios suit anyone building savings outside a retirement fund: an emergency fund, a home deposit, your children’s school fees or long-term wealth for your family. You can start with a monthly debit order or a lump sum.