Definition

Noun: 1. A type of collective investment fund: A unit trust is a regulated investment company that pools money from many investors. This pooled money is used by professional managers to buy and manage a diversified portfolio of assets, such as stocks, bonds, or other securities. 2. A structure of ownership through units: Investors own "units," which are redeemable securities. Each unit represents a proportional share of the trust's overall portfolio of assets.

Usage

• The term "unit trust" is commonly used in the UK, Commonwealth countries, and Asia. In the United States, a very similar structure is typically called a "mutual fund" or a "unit investment trust."
• It describes the legal and financial structure of the investment vehicle itself.
  • She decided to put her savings into a unit trust to gain exposure to the stock market.
  • The performance of the unit trust is tied to the value of its underlying assets.

Examples

Advanced Usage

• "Open-ended" nature: Most unit trusts are "open-ended," meaning the fund can create new units or cancel existing ones based on investor demand. This is different from a closed-end fund, which has a fixed number of shares traded on an exchange.
• "Net Asset Value (NAV)": The price of a single unit is calculated daily based on the total value of the fund's assets divided by the number of units in issue. This is known as the Net Asset Value per unit.

Variants and Related Words

• Mutual Fund (n): The common term in American English for an equivalent open-ended investment company.
• Unit Investment Trust (UIT) (n): A specific type of investment trust in the US, often with a fixed, unmanaged portfolio and a set termination date.
• Open-Ended Investment Company (OEIC) (n): A corporate structure for collective investment used in the UK and Europe, functionally very similar to a unit trust.
• Fund Manager (n): The professional or company responsible for making the investment decisions for the unit trust.

Synonyms

• Collective investment scheme
• Managed fund
• Investment fund

Related Phrases

• To invest in a unit trust: The action of purchasing units.
  • It is advisable to seek financial advice before you invest in a unit trust.
• Unit trust holder: An investor who owns units in the trust.
  • As a unit trust holder, you are entitled to receive distributions from the fund's income.

Noun

1. a regulated investment company consisting of professional managers who issue redeemable securities representing a portfolio of many different securities
   • you can invest in a unit investment trust for as little as $1000