A unit trust – or mutual fund – pools the funds of many small investors to buy stocks, bonds and other securities. Unit trusts are managed by fund managers, who invest the fund’s capital to achieve capital gains. Investors may be able to leave the management of their money to someone else, but they are dependent on the fund manager’s expertise (or lack of it). Unit trusts come at a price, as investors have to pay the fund manager an initial charge, for example, 1.5%, a management fee, which could also be around 1.5% and then a commission for the service.
If you’d like a little more information about unit trusts and why investors choose them, you can watch this short video explanation.