A unit trust is an “open ended” collective investment, meaning it gets bigger as more people invest and smaller as they take money out. Unit trusts allow private investors to make stock market investments with the help of a fund manager. These trusts can be bought via a lump some payment, generally £500 and upwards or through monthly savings of around £30pm. Unit trusts are one of the simplest ways for new investors to gain access to the stock market.

In general a fund manager is used to decide where the money will be invested; this is normally in a wide range of companies in order to spread risk. Unit trusts can be bought from a variety of sources including stockbrokers and independent financial advisors.

Unit trusts are found to have far greater financial rewards than any interest gained through savings accounts; however as with all financial investments there is a high degree of risk and independent bespoke advice should always be sought before making these investments. Contact us today for a free 5 minute review with one of our partnered independent advisors.

Charges for unit trust often vary; these are normally around 5% plus any management fees that are added on an annual basis. However you may find some unit trusts have no initial fee but these are added on later through increased annual management fees, or as an exit charge when units are sold.

There are over 700 hundred unit trusts, some valued at many millions of pounds, within the UK giving investors a wide range of options; because these trust are open ended it means that the number of shares issued can vary on a day to day basis. The price of the unit and any income made depends on the performance of the underlying investment. Generally before investing in any kind of fund the past performance should be taken into consideration, this however does not guarantee a similar future performance.

Open-ended investment funds

Open-ended invesment funds, also known as collective investment schemes are run by fund management companies and include many differnent types of fund, for eample; Unit trusts and OEICs (Open-Ended Invetment Companies, which are also the same as ICVCs-Investment Companies with Variable Capital)

Most open-ended investment funds primarily invest in shares, however they can also be invested in bonds, property and cash. Depending on how much risk the investor is willing to take some companies will spread out the investments and have, for example, some holds in shares and others in bonds. Spreading your investment over these 4 different asset classes will help to reduce risk, however spreading your invesments out over a number of  industrial sectors can also be beneficial. Similarly funds are often grouped in categories such as fixed intrest or UK Equity to help investors narrow down their selection process.