Unit Trust

What are Unit Trusts?

A Unit Trust is a fund composed of investor’s money, which is invested in a variety of financial assets.

When you invest in a unit trust, your money is pooled with that of other investors’ to form a fund, and invested into various assets to meet the unit trust’s objectives by a fund manager.

Advantages of Unit Trust

1. Funds are Managed by Professional Fund Managers

Fund managers are likely to be more experienced and will have the skills and resources to better decide what to invest in.

2. Diversification

Funds in a Unit Trust are invest in a diversified range of assets, this means that risks are better spread over the assets and poor performance of any one asset is less likely to have a major impact on your investment as a whole.

3. Accessibility

Unit Trust also provides investors access to markets which may be difficult for investors to invest in directly.

4. Variety

There are many types of Unit Trust to choose from, and as a result, investors can select a fund or combination of funds to cater to each investor’s specific investment objectives and risk tolerance.

 

Sources:

http://www.investopedia.com/terms/u/unittrust.asp