What is a Unit Trust
There are various types of trusts available and depending on what you wish to get from your trust formation it is important that you are fully aware of the trust structures available to you. Another aspect to consider is the country in which you intend to form your trust, certain jurisdictions only allow for a small variety of trust structures in line with the trust law they adopt. A unit trust is a type of trust structure that can be adopted by the settlor for investment purposes.
For more information on the types of trusts available, click on the following link to view our Offshore Trusts page.
Unit Trust explained
A unit trust is a type of trust structure that is considered under the trust deed as a collective investment. A unit trust is defined as an open ended investment and every unit trust is operated in a specific investment objective.
The formula to understand how a unit trust operates is as follows: the vale of the assets is equal to the total number of units issued, multiplied by the unit process, minus the management fee and other costs charged for transactions.
A unit trust is structured in the following manner;
- The trust is operated by the fund manager for profit
- The nominated trustees monitor the unit trust and ensure the fund manager operates the trust in accordance with the investment objective.
- All unit holders have rights over the assets held in a unit trust
Unlike many other forms of trust structures, unit trusts are not available in every jurisdiction worldwide, in fact, unit trusts are typically only available in the Australia, Isle of Man, jersey, New Zealand, South Africa, Malaysia, UK, Ireland and Singapore.
As previously mentioned, unit trusts are open ended investments. The trust units can be purchased through a personal equity plan, individual savings account, directly from the fund manger or held in an account.
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