A unit trust is a collective investment scheme in which investors’ contributions are pooled together to purchase a portfolio of financial securities, such as equities (shares), bonds, cash, bank deposits etc. The portfolio is managed by professional fund managers.

Each unit trust fund or portfolio has a specific investment objective - income, growth or a combination of the two. The investment objective of a particular unit trust will determine the proportion of the fund invested in a particular security such as company shares.

As the name suggests, a unit trust has a trust framework, with the investments held by an independent trustee. Unit trusts are regulated by the Capital Markets Authority to ensure that they are safe and that only registered professionals are involved with the affairs of the unit trusts.

Unit trusts and other collective investment schemes such as mutual funds have been around the world since the 1930s and have become very popular as the ideal alternative in providing cost effective access to stock markets and fixed income investments, and diversifying one’s portfolio of investments.