Your return on a unit trust depends on one number: the Net Asset Value, or NAV. Understanding how NAV is calculated—and how fees and distributions affect it—is the key to knowing exactly how much your investment is worth.
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The Core Formula: Net Asset Value (NAV)
Every unit trust in Ghana calculates returns using the Net Asset Value (NAV). The NAV is the price of one unit in the fund .
The formula is simple:
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NAV = (Total Assets − Total Liabilities) ÷ Total Number of Units
If a fund has GHS 10,000,000 in assets, GHS 200,000 in liabilities, and 1,000,000 units outstanding, the NAV per unit would be GHS 9.80 .
What Counts as Assets and Liabilities
The assets include everything the fund owns: government bonds, corporate bonds, equities, cash, and any accrued interest or dividends. The liabilities include management fees, trustee fees, audit fees, and any other expenses owed by the fund .
Under Regulation 41 of the Unit Trusts and Mutual Funds Regulations, 2001 (L.I. 1695) , the calculation must account for:
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Deduction of manager, trustee, or custodian remuneration
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Deduction of interest paid or accrued on borrowings
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Adjustments for securities sold or purchased with or without dividend
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Addition of interest or dividends accrued but not yet received
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Deduction of professional fees and registration expenses
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Adjustments for tax liability
How Your Returns Are Generated
Your returns come from two sources :
1. Income
The fund earns interest from bonds and dividends from stocks. This income is either distributed to you or reinvested to buy more units on your behalf.
2. Capital Appreciation
When the value of the fund’s underlying investments increases, the NAV per unit goes up. When those investments lose value, the NAV goes down .
A Simple Example of How Returns Work
Suppose you buy 100 units at GHS 10.00 each, investing GHS 1,000. Later, the NAV rises to GHS 11.50. Your investment is now worth GHS 1,150—a 15% return .
If the fund also distributes income (say, dividends from stocks), that adds to your total return. If you choose to reinvest, you buy more units at the current NAV. If you take the cash, your unit count stays the same but you receive money.
Important: A higher NAV does not mean a better fund. A fund with a NAV of GHS 50 is not necessarily better than one with a NAV of GHS 2. What matters is how the NAV changes over time, not its absolute level .
Key Factors That Affect Your Returns
Several risks can impact the NAV and therefore your returns :
| Risk Factor | How It Affects Returns |
|---|---|
| Interest Rate Risk | When interest rates rise, bond prices fall, lowering the fund’s value |
| Foreign Exchange Risk | Investments in foreign assets can lose value when converted back to cedis |
| Managerial Risk | Poor investment decisions by the fund manager can reduce returns |
| Concentration Risk | If the fund is heavily invested in one asset or sector, losses there hurt more |
| Counterparty Risk | If a party the fund deals with defaults, it can affect liquidity and value |
Fees That Reduce Your Returns
The NAV calculation deducts fees before arriving at the price per unit . These fees reduce what you ultimately earn:
| Fee Type | Typical Rate in Ghana | When It Applies |
|---|---|---|
| Management Fee | 1.25% – 2.0% per year | Deducted from fund assets daily |
| Subscription Fee | 0% – 0.5% | Charged when you buy units |
| Redemption Fee | 0% – 3.0% | Charged when you sell units early |
For example, the EDC Ghana Fixed Income Unit Trust charges a 2.0% annual management fee and a 0.5% subscription fee, with no redemption fee . The Fidelity Fixed Income Trust also charges 2% per year but has no subscription or redemption fees . The PSL Fixed Income Unit Trust charges no fees but recommends staying invested for at least 3 years .
How Withdrawals Are Calculated
When you redeem your units, you receive:
Redemption Proceeds = Redemption Price per Unit (NAV) × Number of Units Redeemed
If the NAV is GHS 1.50 and you redeem 1,000 units, you receive GHS 1,500, minus any applicable redemption fee.
Time-Weighted Returns: The Fair Way to Compare
A common mistake is to calculate returns by simply comparing the starting and ending balance. This is misleading if you added or withdrew money during the period .
Example: You start with GHS 100,000. Six months later, you add GHS 200,000. By year-end, the portfolio is worth GHS 340,000. A simple calculation would suggest a 240% return—but that is wrong because your GHS 200,000 deposit skewed the figure .
The preferred method globally is Time-Weighted Return (TWR) , which removes the effects of deposits and withdrawals to measure the true performance of the fund manager .
Quick Facts
| Topic | Details |
|---|---|
| Core Formula | NAV = (Total Assets − Liabilities) ÷ Number of Units |
| Returns From | Income (interest/dividends) + Capital Appreciation |
| Valuation Method | Mark-to-market, calculated daily |
| Management Fees | 1.25% – 2.0% per year |
| Subscription Fees | 0% – 0.5% |
| Redemption Fees | 0% – 3.0% (for early withdrawals) |
| Regulation | L.I. 1695, Unit Trusts and Mutual Funds Regulations, 2001 |
| Tax | Returns exempt from tax |
Frequently Asked Questions
1. How are unit trust returns calculated in Ghana?
Unit trust returns are calculated using the Net Asset Value (NAV). The NAV is the total value of the fund’s assets minus its liabilities, divided by the total number of units. Your return is the change in NAV over time, plus any income distributed .
2. What is NAV in a unit trust?
NAV stands for Net Asset Value. It is the price of one unit in the fund. It is calculated daily and changes as the value of the fund’s investments changes .
3. How do I calculate my investment value?
Your investment value is the number of units you hold multiplied by the current NAV per unit. This is stated on your investment statement.
4. What fees reduce my unit trust returns?
Management fees (1.25%–2.0% per year), subscription fees (0%–0.5%), and redemption fees (0%–3.0% for early withdrawals) all reduce your returns. These are deducted from the fund’s assets or charged directly .
5. Does a higher NAV mean better returns?
No. A fund with a NAV of GHS 50 is not necessarily better than one with a NAV of GHS 2. What matters is the percentage change in NAV over time, not the absolute level .
6. How is the NAV calculated under Ghanaian law?
Under Regulation 41 of L.I. 1695, the NAV calculation must account for manager/trustee fees, interest paid, adjustments for securities transactions, accrued income, professional fees, and tax liability .
7. Why do I need to understand Time-Weighted Returns?
Time-Weighted Return (TWR) removes the effect of your deposits and withdrawals, showing the true performance of the fund manager. Simple return calculations can be misleading if you add or remove money during the investment period.
8. Are unit trust returns guaranteed in Ghana?
No. Returns are based on market performance and are not guaranteed. The SEC has directed fund managers not to offer guaranteed returns. Your investment value can go up or down
Source: Accra Street JournalÂ
Last Updated on September 16, 2026 by Samuel Kwame Boadu
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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.
