Questions and Answers / Advantages of Unit funds

Advantages of Unit funds

Legislation on investment funds and their multiple characteristics turn Ukrainian investment funds into one of the cheapest, most reliable and simplest methods for portfolio investments in Ukraine.

Lower costs and simplicity

Investment via funds allows considerable savings of monetary, administrative and time resources due to the absence of the need to continually formalize contractual relations with contracting parties, registrars and/or custodians of securities for each securities transaction.

Up to the time of receiving income from the fund, there is no need for an investor to keep accounting of transactions carried out by the manager with assets of the fund for taxation purposes.

Moreover, usually large institutional investors, such as a fund, manage to implement savings on a scale and have lower expenses per unit of invested monetary funds.

Higher Income

Due to stimulating tax legislation with respect to joint investment institutions, in the event of the same actions on the market, an investor of the fund can obtain a better result.

This is possible because revenues of the fund from investment transactions and its passive revenues are not subject to enterprise profit taxation, regardless of whether the fund is of the unit or corporate type.

I.e., the fund may carry out multiple profitable transactions in the market, but as long as the revenues obtained therefrom remain within the fund, they are invested again, multiply assets owned by the fund and increase the value of the investor’s shares without interim taxation.

An investor will have no tax liabilities until it receives payments from the fund, for example, in the form of dividends or in selling shares of the fund.

For comparison, for any income on securities or received from their sale, in the event that these securities are purchased and sold directly by investor, the latter will be subject to tax liabilities.

While for an investor as a shareholder or participant of a fund, tax liabilities will only arise if the latter receives income from the fund, for example, by selling securities of the fund.