What is a Unit Trust Fund? 

Unit trust funds are investments that provide investors with access to a wide range of securities. This helps to minimise risk, as the investor can diversify their investment portfolio. However, unit trusts can also be volatile, so it’s important to choose the fund wisely. A good independent financial adviser can help you to make an informed decision. 

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Investors can invest a lump sum of money or they can buy units. Units are purchased alongside other investors, and the value of the investment will vary as it rises and falls. An investor can either choose to receive a share of the income generated by the fund or to redeem the units and invest elsewhere. There are fees involved, so it’s important to understand what these are before making an investment. 

Unit trusts are regulated by the Financial Conduct Authority. They are commonly used in the United Kingdom as a form of mutual fund, but there are other jurisdictions where they are available as well. It’s up to the investor to check out all the fees involved, as a small percentage difference can mean a large difference in return. 

Funds are managed by a professional, known as a Fund Manager. The manager is paid a management fee by the fund. The management fee is typically based on the percentage of the assets that the manager manages. In some cases, the fund manager may charge an initial service fee. Other charges may include redemption and administrative costs. 

Fees are often based on the underlying value of the assets. For example, if the underlying value of the assets is RM5,000,000, then the unit selling price will be RM5,000,000 divided by the number of units issued. If a unit is sold, the proceeds will be the prevailing unit selling price and the investor’s initial investment. When a unit is redeemed, the prevailing unit selling price will be adjusted, and the proceeds will be the original unit investment plus the returns from the sale. 

Investing in unit trusts involves some risk, but the returns are usually higher than those offered by fixed deposits and other similar investment opportunities. But there’s no guarantee that you’ll make a profit. To determine whether a particular unit trust is suitable for you, consider its track record, as well as its underlying risks. 

There are many different types of unit trusts. Some are active, others are passive. Typically, the fund manager will invest in different asset classes, and aims to outperform the market. Active unit trust management typically charges a higher fee. 

Fund managers must meet certain requirements to be qualified as a fund manager. Trustees must ensure that the interests of investors are protected, and the fund manager must follow the investment strategy of the trust. Trustees also have to safeguard the assets of the trust. 

Unit trusts are considered a risky investment, so investors must be willing to accept it. Investors can use a broker to find a trust that suits their needs.