Apra Review of Unit Pricing Practices

Unitisation is the process by which a pool of assets are broken into portions of ownership (units), which are conceptually similar to shares in a company. The process is applied to unit trusts, unitlinked life insurance products and many superannuation products. Instead of investors’ / fund members’ / policyholders’ interests being expressed as a proportion of the underlying pool of assets in which they have invested, those interests are expressed in units, thus facilitating administrative simplicity and investor understanding. The unit price represents the value of assets per unit and, after adjustment for entry / exit expenses, is used in pricing buy / sell transactions.