A Unit Trust Fund is effectively a vehicle in which individuals can invest their money. Investors can sink their funds into these investments using a range of financial service providers. These include an investment management company, a stock broker, and even sometimes a local or larger bank. These Unit Trust Funds are essentially a large pooled reserve of capital. They permit assortments of investors to combine their liquid assets to invest them. All of the investments together amount to the aggregate assets of a fund.
It is generally the case that such a Unit Trust Fund will have the legal structure like a mutual fund but which is unincorporated. They permit the funds to contain these shared assets and ensure that all profits become dispersed directly back to the individual unit share owners rather than reinvesting them. Such an investment fund becomes established under the auspices of a trust deed. Each investor is literally a member of the trust fund beneficiaries.
A Unit Trust Fund’s success comes down to how experienced and professional a management company which runs it actually proves to be. The managers are allowed to invest in a wide range of investments. Some of the most typical of these include mortgages, securities such as stocks and bonds, real estate property, and cash equivalents such as CDs and money market funds.
The Unit Trust concept is widely utilized in Great Britain and a number of former British colonies and current day British territories. Among these are Jersey and Guernsey of the British Channel Islands, the Isle of Man, Ireland, Fiji, Australia, New Zealand, Singapore, Malaysia, South Africa, Kenya, and Namibia. Within the United Kingdom at least, unit trusts are interchangeable with the phrase mutual fund, though they are quite different from the American versions of mutual funds.
With regards to the assets of a Unit Trust Fund and their value, this can be expressed by taking the price per unit and multiplying it times the amount of units. Naturally there will be expenses taken off of this figure before it is considered final. Some of these expenses include management fees, trading transaction fees, and other relevant costs.
It is the unit trust fund managers who manage the trust in order to realize the greatest potential returns and profits. Trustees will be assigned in order to make certain the manager of the fund is properly pursuing the various objectives and goals of the Unit Trust Fund. Ultimately these managers work for the unit holders who have all rights to the assets of the trust in question. In between the stakeholders in the trust and the manager of the fund in question are the registrars. These middlemen are merely a type of liaison standing in between the two parties. They carry out a number of administrative duties.
These unit trust funds turn out to be open-ended in nature. This means that as new or existing investors add additional money to the trust, then more units will be created at the unit buying price that is current. Similarly, as holders sell their units for cash, an equivalent amount of the fund assets will be sold off at the present selling price per unit.
The income of the fund managers is realized by the bid and offer spread. This represents the difference between the price of buying the units and the price of selling them. This spread will vary from one moment to another and be based on the types of assets the fund manages. It might be merely a couple of basis points for those assets which can be liquidated expeditiously and simply, as with government sovereign bonds. The spread could be even five percent or still higher for assets which are more difficult to buy or sell. Real estate properties are examples of less liquid assets that take longer to transact.