Understanding Units and Ownership
Investment clubs use unit-based ownership to track each member's share of the portfolio. This guide explains how units work, how they're valued, and what they mean for your investment.
What Are Units?
Units are like shares in your investment club. Each member owns a certain number of units, and the total value of your units represents your share of the club's portfolio.
Key Concepts
- Unit – One share of the investment club
- Unit Price – Current value of one unit (also called NAV per unit)
- Units Owned – How many units you hold
- Total Value – Your units × unit price
If you've invested in a unit trust or mutual fund, it works the same way. You buy units at the current price, and your investment value changes as the unit price changes.
How Unit Price Works
NAV (Net Asset Value)
The unit price is calculated from the club's Net Asset Value:
NAV = Total Portfolio Value - Liabilities Unit Price = NAV ÷ Total Units Issued Example: Portfolio Value: R100 000 Total Units: 10 000 Unit Price: R100 000 ÷ 10 000 = R10.00What Affects Unit Price
- Asset Performance – Stocks/ETFs go up or down
- Dividends Received – Increases portfolio value
- Fees Paid – Brokerage fees reduce portfolio value
- Asset Valuations – Admin updates current market values
Buying Units (Contributing)
How It Works
- Make Contribution
Transfer money to club bank account with your Member ID - Admin Records Contribution
Treasurer/admin records your payment in the system - Units Calculated
System calculates units based on current unit price - Units Issued
Units added to your account automatically
Unit Calculation Example
Current Unit Price: R10.00 Your Contribution: R1 000 Units Purchased = R1 000 ÷ R10.00 = 100 units Your New Balance: Previous: 500 units New: 600 units Value: 600 × R10.00 = R6 000When your contribution is recorded, units are issued automatically based on the current unit price. You don't need to do anything—just check your dashboard to see your new units.
Viewing Your Units
On Your Dashboard
The Units card shows:
- Units Owned – Total units you hold
- Current Unit Price – Price per unit today
- Total Value – Your units × unit price
- Return % – Gain or loss since you joined
Units Page
Navigate to Units tab for detailed information:
- Unit price history (chart)
- Your unit transactions (purchases, redemptions)
- Cost basis (what you paid)
- Unrealized gain/loss
Unit Price Changes
Price Goes Up
When the portfolio performs well:
- Your units are worth more
- Total value increases
- Positive return % (green)
- New contributions buy fewer units
Price Goes Down
When the portfolio underperforms:
- Your units are worth less
- Total value decreases
- Negative return % (red)
- New contributions buy more units
Unit price fluctuations are normal. Investment clubs are designed for long-term growth. Short-term drops don't mean you've lost money unless you withdraw at that price.
Calculating Your Return
Simple Return
Total Invested: R5 000 Current Value: R6 500 Gain: R1 500 Return: (R1 500 ÷ R5 000) × 100 = 30%What's Included
- Capital Gains – Asset price increases
- Dividends – Income from holdings
- Fees – Brokerage and management fees (reduces return)
Unit Ownership Percentage
Your ownership share of the club:
Your Units: 600 Total Club Units: 10 000 Your Ownership: (600 ÷ 10 000) × 100 = 6% This means: - You own 6% of all club assets - You're entitled to 6% of dividends - You have 6% voting power (if applicable)Redeeming Units (Withdrawing)
How Redemption Works
- Request Withdrawal
Submit withdrawal request with number of units - Value Calculated
System calculates value: units × current unit price - Admin Approval
Treasurer/admin reviews and approves - Units Burned
Units removed from your account - Payment Made
Cash transferred to your bank account
Redemption Example
Units to Redeem: 100 Current Unit Price: R12.00 Payout Value: 100 × R12.00 = R1 200 Your New Balance: Previous: 600 units (R7 200) After: 500 units (R6 000) Cash Received: R1 200Most clubs require advance notice for withdrawals (e.g., 30 days). This gives the club time to raise cash by selling assets if needed. Check your club's withdrawal policy.
Unit Price Updates
When Price Changes
Unit price is updated when:
- Assets are revalued (admin updates market prices)
- Dividends are received
- Fees are paid
- Assets are bought or sold
Update Frequency
- Monthly – Most common for small clubs
- Quarterly – For less active clubs
- On-Demand – When major transactions occur
Cost Basis Tracking
Your cost basis is what you paid for your units:
Example
Transaction History: Jan: Bought 100 units @ R10.00 = R1 000 Feb: Bought 50 units @ R11.00 = R550 Mar: Bought 75 units @ R12.00 = R900 Total Units: 225 Total Cost: R2 450 Average Cost: R2 450 ÷ 225 = R10.89 per unit Current Price: R13.00 Current Value: 225 × R13.00 = R2 925 Unrealized Gain: R2 925 - R2 450 = R475 (19.4%)Best Practices
- Regular contributions – Dollar-cost averaging smooths out price fluctuations
- Long-term view – Don't panic over short-term price drops
- Check monthly – Review your units and value regularly
- Understand NAV – Know what drives unit price changes
- Plan withdrawals – Give advance notice per club policy
- Track performance – Monitor return % over time
Common Questions
Why did unit price drop when I contributed?
Unit price is calculated from total portfolio value. Your contribution increases the portfolio, but the price is set before your contribution is added. You buy at the current price, then the next calculation includes your money.
Can I transfer units to another member?
Some clubs allow unit transfers between members. Check with your admin. If allowed, the system will transfer units at the current unit price.
What happens to my units if I leave?
You can redeem (sell back) your units to the club at the current unit price. The club pays you cash, and your units are burned (removed from circulation).