Unit Trusts

A unit trust is an open ended collective investment. It is open ended because the number of 'units' in each trust will vary according to supply and demand. It is collective because it puts together the money from many different investors for a professional investment manager to look after. It is the job of the unit trust fund manager to make sure the money is invested properly and to deliver the investors the very best returns. Most unit trusts use the money given to them by unit holders to buy ordinary shares, or equities, but with more than 2,000 unit trusts managed by around 200 management companies, there are a great many different types from which to choose. Some unit trusts are very general and hold a large number of shares in different companies, spreading investments into overseas companies in some cases. Others are more specialised, giving the unit holders access to a particular geographic area or a particular type of investment, such as Fixed Interest Investments. It is important to decide what level of risk you want to take before choosing a unit trust. In any event though, unit trusts are a way of spreading risk across a larger number of ordinary shares than might otherwise be possible.

 

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