Unit Trust

The unit trust is a form of collective investments on the basis of a trust ( trust deed ). In unit trust statute (see Prospectus) are specified the most important rules.

Unit trusts are placed in Australia, Ireland, the Isle of Man, Jersey, New Zealand, South Africa, Singapore and the United Kingdom as an alternative to investment company ( fund companies ) and contract funds ( co-ownership ).

Trusts Unit are open-ended investments. Each fund has a specific investment width and depth ( investment objectives ) as the default, which specifies the fund management, fund objective and limitations.

Origin

The first investment trust was launched in the UK as a "fixed trust" under the name "The Foreign and Colonial Government Trust" and was presented on 20 March 1868 in the " Times " to the public. In the period 1870-1930 more than two hundred investment trusts ( investment company ) were launched in the UK. The majority of these trusts was organized in the legal form of a limited company ( Limited Liability Company ).

The first unit trust, based on American originals, was launched in the UK in 1931 by M & G ( according to the idea of Ian Fairbairn ). Reason for the creation of the first unit trust was, which has been shown during the stock market crash of 1929, the mutual funds have survived in the U.S., this crisis relatively stable. This should be followed with the creation of a unit trust for the benefit and protection of investors in the UK.

This first British unit trust was established as "The First British Fixed Trust". The fund's assets were invested in the shares of 24 leading companies. This investment was guaranteed for 20 years and not changed (hence. "Fixed trust" It is a form of a passively managed funds ).

The "First British Fixed Trust" was reissued as "M & G General Trust " and later in " Blue Chip Fund" renamed (Source M & G).

The first "real flexible" ( actively managed unit trust ) was launched in 1934 as "The Foreign Government Bond Trust".

By 1939, there were approximately 100 trusts in the UK. These managed approximately £ 80 million.

Regulatory acts

Already in December 1935, a report on ( fixed) unit trusts was by the London Stock Exchange published and recommended statutory regulation for the protection of investors and investments. The London Stock Exchange saw himself not able to provide this protection. 1939 was the first legislation in the United Kingdom in this regard adopted ( Prevention of Fraud (Investments ) Bill).

All national legal provisions regarding the investment and management of funds in the EU are now broadly in line with the UCITS Directive and the MiFID as well as international standards.

Fund organization

• The fund manager for the Fund to make a profit. Its main purpose of the fund is to select and manage the investments.
• The management of funds ( in the Unit Trust, the Trustee, Eng. Trustee ) ensures that the / fund managers stick to the investment objectives of the Fund and ensures the fund's assets. The fund management of the unit trust is usually the legal owner of the Fund 's assets.
• Shareholders (investors, Unit Holder), the ( economic ) rights of fund assets ( in relation to their investments). These rights are designed and circumscribed by the Fund's prospectus. The shareholder has interest in the assets of the unit trusts no ( co-) ownership.
• The fund dealers (eg a bank) allow the shareholder access to the Unit Trust
• The registrars are usually engaged by the Fund Manager and commonly act as a mediator between the various fund managers and other stakeholders as well as the authorities.

Access to funds

Unit trusts are open during the existence of the Fund for new shareholders. The fund is divided into shares, which are in direct proportion to the change in the value of the Fund. If the funds supplied assets, new shares are issued. If shares are redeemed, the number of shares reduced accordingly in the fund. Under this system, the number of shares always reflect the Fund's assets. Trading in Unit Trust shares itself is usually no commissions.

Bid-offer spread

The fund manager makes its profit from the difference between the current sales price ( offer price ) of the share and the bid price ( bid price ) of shares. This difference is referred to as bid-offer spread. The bid -offer spread is dependent on the type of assets (investments) that are held in the funds and their market development (the better the market performance of the fund, the greater the demand for the Shares ). The Unit Trust Statute are often the fund manager also has the right to influence the bid -offer spread of market conditions. This allows the fund manager to control, among other things, the liquidity of the Fund. In some countries, therefore, the bid -offer spread is called a " bid-ask spread" (English " bid-ask spread " of " Bid" - offer, bid, and "Ask" - ask price, price range ).

The calculation of the price of a component ( unit) is based on four key factors:

• The development of the invested assets is based on the fund's assets,
• Number of issued or approved for issue fund shares,
• Taxes and duties,
• Essential instructions about the design and the amount of the issue price.

Share Dealing

Investments in unit trusts can be purchased directly from the Fund Management or through distributors (eg banks).

Net Asset Value of the Fund

A share is issued when money is invested in the fund and withdrawn if the share is repurchased.

The actual initial ( creation price ) and the previously established and mandatory redemption price upon liquidation of the fund ( cancellation price or redemption price ) is true of a share is not always with the current sales price ( offer price ) and purchase price ( bid price ) agreement for the fund shares.

Subject to regulatory and statutory requirements, these prices may be more or less different and reflect the current market value of plan assets at the date of investment -related. The profits from the purchase and sale of shares at the current price are referred to as "box profits ".

Comparison with the Investment Company

In the UK many unit trusts were ( etc., for example, SICAV, SA with variable capital, SE) converted from fund managers in investment companies in recent years.

Investment companies usually have only a purchase and sale price ( NAV). Investment companies are recognized and disseminated worldwide and the calculation of the purchase and sale price (NAV ) is carried out according to standardized rules.

The greater transparency with respect to the unit value and the fees and the better opportunities for sales of shares has meant that the unit trust were largely replaced by the investment companies.