Unit Trust vs Mutual Fund: What Is the Difference in Ghana?

When you walk into a fund manager’s office or browse investment platforms in Ghana, you will often see the terms “unit trust” and “mutual fund” used side by side. They sound like the same thing, and for most practical purposes, they are. But there is a legal and structural difference that matters if you want to understand what you are actually buying.

The Short Answer

In Ghana, unit trusts and mutual funds are both types of Collective Investment Schemes (CIS). They pool money from many investors and invest it in a diversified portfolio managed by a professional. The Securities and Exchange Commission (SEC) regulates both under the same law—the Securities Industry Act, 2016 (Act 929) .

The main difference is how they are legally set up:

• A mutual fund operates as a public company with a board of directors. Investors are called shareholders.

• A unit trust operates as a trust arrangement with a trustee company. Investors are called unit holders .

For your returns and risks, the two are essentially identical. As one SEC publication put it: “Although the legal constitution of unit trusts and mutual funds differ, their characteristics as investment vehicles are identical” .

The Legal Structure: Company vs Trust

Mutual Fund: A Company with Shareholders

A mutual fund is set up as a public company. It has a board of directors that oversees the fund’s activities, approves contracts with service providers, and ensures the fund operates according to its stated objectives .

Under the Securities Industry Act, a mutual fund must appoint:

• A manager (a company incorporated in Ghana) to handle day-to-day investment decisions

• A custodian (a bank, insurance company, or approved financial institution) to hold the fund’s assets separately from the manager’s own assets

Investors in a mutual fund are shareholders. They hold shares in the company, and their ownership is evidenced by share certificates or electronic records.

Unit Trust: A Trust with a Trustee

A unit trust is not a company. It is a trust arrangement created by a trust deed. The trust deed is a legal document that sets out the rules for how the fund is managed, how units are priced, and how income is distributed .

A unit trust has:

• A manager who handles investment decisions

• A trustee (a bank, insurance company, or approved financial institution) who holds the fund’s assets in trust for the investors

Investors in a unit trust are unit holders. They hold units representing their share of the trust’s assets. The trustee’s job is to ensure the manager acts in the best interest of the unit holders .

Why the Difference Matters (And When It Doesn’t)

For most everyday investors, the practical difference between a unit trust and a mutual fund is minimal. Both offer diversification, professional management, liquidity, and SEC regulation. The minimum investment amounts are similarly low—some funds in Ghana allow you to start with as little as GH¢20 .

The structural difference matters mainly in terms of governance:

In a mutual fund, the board of directors provides oversight and the custodian holds the assets. In a unit trust, the trustee provides oversight and holds the assets. Both arrangements are designed to protect investors by keeping fund assets separate from the manager’s own money .

What They Have in Common in Ghana

Under Ghanaian law, unit trusts and mutual funds are regulated in exactly the same way by the SEC. Both must:

• Be licensed by the SEC before selling securities to the public

• File a prospectus with the SEC that discloses investment objectives, risks, fees, and other material information

• Comply with investment restrictions on how much can be invested in a single issuer or asset class

• Submit periodic financial and operational reports to the SEC

• Use mark-to-market valuation so that unit/share prices reflect current market values

The SEC’s investment guidelines apply equally to both. For example, the value of a scheme’s holding in a single issuer cannot exceed 20% at book value or 25% at market value. No scheme can hold more than 10% of any class of securities issued by a single issuer .

A Brief History in Ghana

Ghana’s first unit trust was the HFC Unit Trust, established by Legislative Instrument L.I. 1516 of 1991. It was followed by the HFC Real Estate Investment Trust (HFC REIT) in 1995 .

Mutual funds came later and grew rapidly. By 2008, Ghana had seven mutual funds and four unit trusts operating, with a combined net asset value of GH¢149.5 million. The Databank Epack Investment Fund was the largest scheme at the time, holding 57.86% of total industry net asset value.

Today, the SEC licenses dozens of mutual funds and unit trusts, and the distinction between the two has become less important to investors than the fund’s investment objectives, track record, and fees.

How to Choose in Ghana

When deciding between a unit trust and a mutual fund, the structural difference should not be your main concern. Instead, focus on:

Fund type: Is it a money market fund (low risk, short-term), a fixed income fund (moderate risk, regular income), a balanced fund (mix of assets), or an equity fund (higher risk, long-term growth)?

Track record: How has the fund performed over three to five years?

Fees: What are the management fees, entry fees, and exit fees? These vary significantly between providers.

Minimum investment: Some funds allow you to start with GH¢20, while others require more .

Fund manager reputation: Is the manager licensed by the SEC and experienced in the Ghanaian market?

Quick Facts

Frequently Asked Questions

1. What is the difference between a unit trust and a mutual fund in Ghana?
The main difference is legal structure. A mutual fund is a public company with a board of directors, and investors are called shareholders. A unit trust is a trust arrangement with a trustee company, and investors are called unit holders .

2. Are unit trusts and mutual funds regulated differently in Ghana?
No. Both are regulated by the Securities and Exchange Commission (SEC) under the Securities Industry Act, 2016 (Act 929). They must both be licensed, file a prospectus, and comply with the same investment restrictions .

3. Which is better: a unit trust or a mutual fund?
For most investors, the practical difference is minimal. Both offer diversification, professional management, and SEC regulation. The better choice depends on the fund’s investment objectives, track record, fees, and minimum investment—not on whether it is structured as a unit trust or a mutual fund.

4. What is a Collective Investment Scheme in Ghana?
A Collective Investment Scheme (CIS) is a pool of funds managed on behalf of investors by a professional money manager. In Ghana, CIS includes both unit trusts and mutual funds .

5. Can I invest in a unit trust or mutual fund with little money?
Yes. Many funds in Ghana allow you to start with as little as GH¢20. Some providers also allow regular monthly contributions with even smaller amounts .

6. How is the value of my investment calculated?
The value of your investment is the number of units or shares you hold multiplied by the current price per unit. This price is based on the fund’s Net Asset Value (NAV), which is calculated using mark-to-market valuation of the fund’s assets .

7. What happens if the fund manager makes a loss?
The value of your investment will decrease. Unit trusts and mutual funds do not guarantee returns. The SEC has directed fund managers not to offer guaranteed returns . Your investment is subject to market risk, and you could lose money

Source: Accra Street Journal

Last Updated on September 16, 2026 by Samuel Kwame Boadu

Samuel Kwame Boadu

Samuel Kwame Boadu is a Ghanaian media entrepreneur and storyteller with a passion for amplifying urban voices and uncovering everyday truths. He is the Editor-in-Chief and Founder of Accra Street Journal, a dynamic digital platform dedicated to capturing the pulse of Ghana’s capital—its people, culture, challenges, business, sports and innovations.

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