What Is a Unit Trust?

Unit trusts are one of the investment vehicles. By pooling the funds of many individual investors, fund managers are able to manage large, efficient, and diversified portfolios. The total number of unit certificates of a unit trust is fixed. Generally, bonds are invested in bonds. The bond portfolio is not actively traded and has a fixed maturity. Once a unit trust is composed of a promoter (usually a brokerage company or bond underwriter) and handed over to the trustee, the trustee will hold all bonds until the issuer redeems. ^[1]