Unit trust: Difference between revisions
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'''Unit trust''' is the earliest form of "collective [[investment]] scheme". A unit trust is basically a pooling device which collects funds from a massive number of investors to purchase securities which are then collectively managed by qualified managers. Every investor achieves units and whole [[investment fund]] is held on trust for the investors as beneficiaries by a trustee <ref>Hudson A. (2014) Equity and Trusts, Cavendish Publishing, p. 733, </ref>( institution which holds the assets on behalf of the beneficial owners). A separate fund manager make investment decisions and also will occupy fiduciary position. Unit trust is an arrangement created through a trust deed and adjusted by specific provisions. Unit trust are pretty similar to mutual funds. Unit trusts are very popular with investors who like the advantage of being immediately able to buy into professional managed and differential portfolio of securities<ref>Chwee Huat T. Kuen-Chor K. (2014) Handbook of Singapore — Malaysian Corporate Finance, Butterworth-Heinemann p. 117</ref>. | |||
'''Unit trust''' is the earliest form of "collective investment scheme". A unit trust is basically a pooling device which collects funds from a massive number of investors to purchase securities which are then collectively managed by qualified managers. Every investor achieves units and whole [[investment fund]] is held on trust for the investors as beneficiaries by a trustee <ref>Hudson A. (2014) Equity and Trusts, Cavendish Publishing, | |||
==History== | ==History== | ||
First unit trust was established in the United States in the 1930s so it is not new. At first unit trusts were passive and closed funds. The menager had small range to change the investment. In 1931 in the UK was launched the first unit trust.This unit trust was lunched because they were trying to follow comparative robustness of US mutual funds through the Wall Street crash in 1929. The first trust was called the | First unit trust was established in the United States in the 1930s so it is not new. At first unit trusts were passive and closed funds. The menager had small range to change the investment. In 1931 in the UK was launched the first unit trust.This unit trust was lunched because they were trying to follow comparative robustness of US mutual funds through the Wall Street crash in 1929. The first trust was called the "First British Fixed Trust". There were around hundred trust in the UK by 1939 <ref>Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, p. 58 </ref>. | ||
Nowadays unit trusts fall into one of this category<ref>Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, | Nowadays unit trusts fall into one of this category<ref>Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, p. 57 </ref>: | ||
* Securities funds | * Securities funds | ||
* Property funds | * Property funds | ||
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==Buying and selling units== | ==Buying and selling units== | ||
Unit trust are bought and sold through fund manager. Their value changes according the overall value of the fund, which in turn moves according to changes in the underlying asset prices in the fund. Some unit trust guarantee [[dividend]] income or interest payments from the units in virtue of the dividends or interest paid by the underlying shares or another investment <ref>Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, | Unit trust are bought and sold through fund manager. Their value changes according the overall value of the fund, which in turn moves according to changes in the underlying asset prices in the fund. Some unit trust guarantee [[dividend]] income or [[interest]] payments from the units in virtue of the dividends or interest paid by the underlying shares or another investment <ref>Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, p. 58 </ref>. | ||
Similar to a lot investment, there are charges which investors must pay to defray the expanses of managing funds, and those charges could be very different. The annual [[service]] charge which investment manager received is stated as a percentage<ref>Chwee Huat T. Kuen-Chor K. (2014) Handbook of Singapore — Malaysian Corporate Finance, Butterworth-Heinemann | Similar to a lot investment, there are charges which investors must pay to defray the expanses of managing funds, and those charges could be very different. The annual [[service]] charge which investment manager received is stated as a percentage<ref>Chwee Huat T. Kuen-Chor K. (2014) Handbook of Singapore — Malaysian Corporate Finance, Butterworth-Heinemann p. 123</ref>. | ||
'''Unit [[Price]]''' | '''Unit [[Price]]''' | ||
| Line 39: | Line 25: | ||
==Footnotes== | ==Footnotes== | ||
<references/> | <references/> | ||
{{infobox5|list1={{i5link|a=[[Warrant]]}} — {{i5link|a=[[Issue of shares at premium]]}} — {{i5link|a=[[Class Of Shares]]}} — {{i5link|a=[[Investment fund]]}} — {{i5link|a=[[Hybrid instrument]]}} — {{i5link|a=[[Bonds in finance]]}} — {{i5link|a=[[Options]]}} — {{i5link|a=[[Classification of financial markets]]}} — {{i5link|a=[[Held to maturity securities]]}} }} | |||
==References== | ==References== | ||
Latest revision as of 06:29, 18 November 2023
Unit trust is the earliest form of "collective investment scheme". A unit trust is basically a pooling device which collects funds from a massive number of investors to purchase securities which are then collectively managed by qualified managers. Every investor achieves units and whole investment fund is held on trust for the investors as beneficiaries by a trustee [1]( institution which holds the assets on behalf of the beneficial owners). A separate fund manager make investment decisions and also will occupy fiduciary position. Unit trust is an arrangement created through a trust deed and adjusted by specific provisions. Unit trust are pretty similar to mutual funds. Unit trusts are very popular with investors who like the advantage of being immediately able to buy into professional managed and differential portfolio of securities[2].
History
First unit trust was established in the United States in the 1930s so it is not new. At first unit trusts were passive and closed funds. The menager had small range to change the investment. In 1931 in the UK was launched the first unit trust.This unit trust was lunched because they were trying to follow comparative robustness of US mutual funds through the Wall Street crash in 1929. The first trust was called the "First British Fixed Trust". There were around hundred trust in the UK by 1939 [3].
Nowadays unit trusts fall into one of this category[4]:
- Securities funds
- Property funds
- Futures and Options Funds
- Warrant funds
- Money Market funds
- Umbrella funds
Buying and selling units
Unit trust are bought and sold through fund manager. Their value changes according the overall value of the fund, which in turn moves according to changes in the underlying asset prices in the fund. Some unit trust guarantee dividend income or interest payments from the units in virtue of the dividends or interest paid by the underlying shares or another investment [5]. Similar to a lot investment, there are charges which investors must pay to defray the expanses of managing funds, and those charges could be very different. The annual service charge which investment manager received is stated as a percentage[6].
Unit Price
It is possible to buy or sell units only through the fund manager. Usually there are two prices:
- "the offer price"- the price that investor must pay to buy unit
- "the bid price" - the price that investor get from selling units
The fund manager makes a profit in the difference between "offer" and "bid" price.
Footnotes
- ↑ Hudson A. (2014) Equity and Trusts, Cavendish Publishing, p. 733,
- ↑ Chwee Huat T. Kuen-Chor K. (2014) Handbook of Singapore — Malaysian Corporate Finance, Butterworth-Heinemann p. 117
- ↑ Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, p. 58
- ↑ Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, p. 57
- ↑ Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier, p. 58
- ↑ Chwee Huat T. Kuen-Chor K. (2014) Handbook of Singapore — Malaysian Corporate Finance, Butterworth-Heinemann p. 123
| Unit trust — recommended articles |
| Warrant — Issue of shares at premium — Class Of Shares — Investment fund — Hybrid instrument — Bonds in finance — Options — Classification of financial markets — Held to maturity securities |
References
- Chwee Huat T. Kuen-Chor K. (2014) Handbook of Singapore — Malaysian Corporate Finance, Butterworth-Heinemann
- Hudson A. (2014) Equity and Trusts, Cavendish Publishing
- Loader D. (2011) Fundamentals of Fund Administration: A Guide, Elsevier
- Roche J. (1995) Property Futures and Securitisation - the Way Ahead, Woodhead Publishing
Author: Magdalena Łubiarz
