Unit Trust

A unit trust is a type of trust in which the trust fund is divided into a fixed number of units. The portion of the trust fund which each trust beneficiary is entitled to depends on the number of units allotted to them.

This form of trust is used when the assets in the trust are not fixed and cannot be ascertained at the time that the trust is created. Whether trust fund grows or shrinks, beneficiaries receive a percentage of assets equal to the number of units allotted them.

Unit trusts are mot commonly used as an investment vehicle through which shareholders pool assets which are managed by a trustee. When used in this way, unit trusts are very similar to mutual funds managed by a fund manager.

Editor Daniel Dreier
Daniel Dreier is editor and personal finance expert at moneyland.ch.

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