Definitions for "Unit Trusts"
Investment funds that are managed portfolios; they are usually shares, but can also include cash, bonds and gilts.
Unit trusts allow beneficiaries to have a clearly defined share trust - this share is in the form of units. The income that a unit trust earns is distributed according to the number, or class, of units held by the beneficiaries.
A form of Collective Investment Scheme. Investors buy units in a unit trust which then uses the money raised to invest in a range of specified investment areas. If investors wish to redeem their units, they do so by selling them back to the manager of the unit trust. As a result, the unit trust will have to sell some investments to generate the cash required to repurchase the units. This gives rise to the description of unit trusts as open-ended - the size of the unit trust may vary and is determined by the level of new units purchased relative to units redeemed. See also Investment Trusts, Undertakings for Collective Investments in Transferable Securities and Open-Ended Investment Companies.