Unit Trust

Unit Trust Meaning:
The term unit trust refers to a type of collective investment established under a contract, wherein the key goal is to minimize the market risk by investing in a diversified portfolio that shares the investment risk. Unit trusts are usually open-ended investments and the asset value is signified by the total number of units issued, multiplied by the unit price, minus the costs and fees involved. A unit trust is denoted as an investment vehicle, where an investor creates a monetary pool of capital by issuing a certain quantity of units to the investors.

Unit Trust Example:
Unit trusts are usually open-ended and the monetary fund is divided into a number of units at different prices directly proportionate to the value of the funds Net Asset Value (NAV). Adding up the stocks, bonds and securities in the portfolio and deducting the operating expenses help to ascertain the NAV per unit. When additional money is invested, new units will be created and will match the unit-buying price. When units are redeemed, the sold units will match the unit-selling price. The unit price is usually calculated at the end of the trading day. This produce is available in a country such as the Philippines.