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One of the most popular types of investment for private individuals is known as a unit trust. These are communal, bulk investments in the stock market administered by a fund manager on behalf of several different investors, each of whom owns part of the trust in the form of individual units. A unit trust is usually associated with a certain strategy that the fund manager will pursue with the fund. You can get trusts that invest mainly in high risk investments with high potential returns, or trusts that mainly stick with safe bets such as shares in blue chip companies. A unit is not a fixed percentage of a total fund, and the overall size of the fund is dictated by how many people have invested in it. There is a direct correlation between the performance of the shares in a unit trust and the value of the units themselves. As an investor, you would hope for your units to increase in value over time, but this is not always the case, as they are dependent on the movements of the stock market. You would also be in line to receive your share of any dividends and interest payments from the investments in your unit trust. There are several benefits involved with a pooled investment such as a unit trust. One of the main ones is that you will be able to take advantage of the expertise and judgement of the professional investor in charge of the trust, rather than using your own judgement. A unit trust is a good way to spread the risk of investing across many different types of investment. It allows you to do this with a much smaller investment than would be required if you were buying the shares yourself. Economies of scale are another reason why unit trusts represent good value for the investor, as the fees that are charged whenever you buy or sell shares are proportionately smaller for larger scale investments. One of the main advantages of investing in unit trusts is that it is far less time consuming than investing in shares directly, as the fund manager will take care of all the buying, selling, and income collection chores for you.
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Otha Isiminger wrote this article about unit trust accounts because he has opened one with Legal
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