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| Unit trusts |
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Unit trusts are one of the most popular types of investment fund in the UK, and involve large numbers of investors pooling their money and entrusting it to a unit manager. This manager will be a specialist investor, using their expertise to invest these pooled funds in financial markets, looking for investment opportunities across the world. The structure of a unit trust works by dividing up the pooled money into units. The number of units is not fixed and will fluctuate according to demand, as will the price of each unit. The unit price is divised by taking a valuation of all the individual companies that the pooled funds are invested in; the value is then divided by the number of units held in the fund at that time to give the unit price. If you look in the financial press you'll see that there are two prices quoted for a unit trust; a price to buy - the offer price, and a price to sell - the bid price. This is what's called 'dual pricing' or the 'bid/offer spread'. |
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