Unit trust

A trust or open ended fund whose objective is typically to enable an investor to acquire a small stake in a large portfolio of investments and spread risk across a large number of shares. A unit trust scheme is constituted by a trust deed generally entered into between a trustee (typically a bank or insurance company) and the manager of the scheme who will be responsible for investing the assets of the unit trust in accordance with the terms of the trust deed. The investors are the beneficial owners of the trust property and their interests are represented by units in the unit trust scheme. Each unit represents an undivided share in the unit trust’s property.

Unit trusts may be authorised under the Financial Services and Markets Act 2000 (authorised unit trusts) or unauthorised unit trusts. Promotion of an unauthorised unit trust scheme in the UK is severely restricted.