Strategies regarding unit trust funds are similar to today’s investments clubs. A group of investors put their money into a single pot, and together, they invest the entire lot with the assistance of a fund manager. By pursuing this strategy, investors in unit trust funds are able to have a larger impact on the money they invest by having a larger volume to invest. Rules regarding how the unit trust funds are to be invested will be set up by investors along with the fund manager. Together they will decide what their investment philosophy will be, what they invest in, and how aggressive the investment in unit trust funds.
There are several options for purchasing unit trust funds. Fund management firms can provide investors with unit trust funds, as can your financial advisor or discount brokerage house. The least expensive way to purchase unit trust funds is through discount houses, as a direct purchase to a fund management company will be met with increased fees. There are usually management charges associated with unit trust funds, as well as potential charges for administration and other services.
The structure of unit trust funds can be rather complex. The fund manager runs the trust for profit. There are trustees, who ensure the fund manager keeps in line with the fund's investment objective, along with safeguarding the trust assets. The unit holders have the actual rights to the trust assets. The distributors allow the unit holders to transact in the fund manager's unit trusts. The registrars work with the fund manager and perform as a liaison between the fund manager and all the stakeholders.
When you purchase unit trust funds, you are actually buying a share in an investment fund called a unit. This unit trust is open ended as your fund manger has the ability to create more units as necessary. Also, when you buy or sell unit trust funds, your price will be determined based on forward pricing. This means that the price point for unit trust funds will be set at a specific time of day, so that when the purchase takes place, it will move forward to the next day’s price.
The unit trust funds industry originated in the 1930's, as a response to the stock market crash when mutual funds were still relatively valuable. Today unit trust funds have grown to enormous proportions with several thousand funds to choose from. It continues to grow in popularity as it provides an avenue for small investors to play on a world stage.