Unit trusts (sometimes referred to simply as ‘funds’) are collective investments run by fund management companies. The fund manager buys a range of shares in different companies that are pooled in a fund, the value of which can be worth many millions of pounds. This helps to spread risk. So, if one company has a bad spell or even goes bust, its impact on the fund is relatively small. These funds are divided into units of equal value. The number of units you personally hold depends on how much you have invested. The price of units rises and falls in line with the value of the investments in the fund.

Because shares are traded on the stock exchange, the total value of the shares held by the fund can move up and down from day to day as share prices move. As an investor, you buy units in the hope that the value of your units rises over time as the prices of the underlying shares increase. As with most investments, there are charges, which vary between funds, that investors have to pay to cover the expenses of managing funds.

Investors' lump sum or regular contributions are used by the fund manager to buy a wide range of shares, and these shares are then pooled together and repackaged as units, with a unit price reflecting the value of the investments. It is important to note that Unit Trusts can only be invested in through fund management companies, who employ specialist fund managers.

Talk to us
To speak to one of our consultants you can either call us on 01793 750101 or submit an enquiry form and we will contact you shortly.