UNIT TRUST Meaning and
Definition
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A unit trust refers to a type of collective investment scheme where a group of investors pool their money together to form a fund, which is then managed by a professional fund manager. The fund manager's responsibility is to invest the pooled money in a diversified portfolio of assets, such as stocks, bonds, and other securities, in accordance with the fund's investment objective.
Investors in a unit trust are called unitholders, and they hold units of the fund proportional to the amount of money they have invested. Each unit represents a fraction of ownership in the overall fund. The value of a unit is calculated by dividing the net asset value (NAV) of the fund by the total number of units outstanding.
Unit trusts are commonly considered a form of collective investment because they allow individual investors to participate in a diversified portfolio of assets without requiring large amounts of capital. Additionally, the fund manager's expertise enables the unitholders to benefit from professional investment management.
Unit trusts are open-ended funds, allowing investors to buy or sell units at the current NAV. The price of a unit is determined by the market demand and supply dynamics and may differ from the fund's NAV due to factors like transaction costs and market sentiment.
Overall, unit trusts provide retail investors with a convenient and accessible way to access the benefits of diverse investment portfolios managed by professionals.
Common Misspellings for UNIT TRUST
- ynit trust
- hnit trust
- jnit trust
- init trust
- 8nit trust
- 7nit trust
- ubit trust
- umit trust
- ujit trust
- uhit trust
- unut trust
- unjt trust
- unkt trust
- unot trust
- un9t trust
- un8t trust
- unir trust
- unif trust
- unig trust
- unit tryst
- unittrust
Etymology of UNIT TRUST
The word "unit trust" has its etymology rooted in the field of finance and investing. The term combines two key elements:
1. Unit: In the context of finance, a unit represents a share or a portion of something. It is often used to denote ownership or a fraction of a whole.
2. Trust: Refers to a legal entity created to hold and manage assets on behalf of investors or beneficiaries. A trust is established with a trustee who manages the assets, while the beneficiaries hold beneficial ownership.
When combined, "unit trust" signifies an investment fund structure where investors pool their money together to form a trust. They purchase units in this collective investment scheme, and the trust's assets are managed by professional fund managers. The investors then become beneficial owners of the units they hold, sharing in the profits and losses of the trust according to the number of units owned.
Similar spelling words for UNIT TRUST
- untruth,
- unitarian,
- unuttered,
- untrusty,
- untrustiness,
- unattired,
- untrusting,
- untruthfully,
- untruly,
- unitary,
- untrustworthy,
- unitard,
- untruthful.
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