Unit Trusts are collective investments, which enable individuals to pool their money into a fund, which is then invested in a wide spread of shares or fixed interest securities.
Unit Trusts are 'open-ended' which means they may create or cancel units on a daily basis depending on demand.
With Unit Trusts, the price of a unit is directly determined by the value of the assets it holds.
Unit Trusts offer investors the potential to achieve capital gains, which exceed what is usually possible in the Building Society, however they do involve taking a degree of added risk.
Some of this risk may however have been minimised because when you put your money into a Unit Trust, you are effectively buying a small quantity of shares in several companies, which the fund manager decides.
Effectively Unit Trusts are a way of spreading risk across a larger number of ordinary shares than might otherwise be possible.
Trust law governs Unit Trusts which brings with it tax advantages.
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