Unit trusts, or collective funds.
All the investments mentioned earlier are for individual investments. On the other hand, a unit trust, or unit trust, is a way of collectively investing in equities and fixed income instruments. Even a person with only Rs 1,000 can buy a unit unit; The accumulated capital is then professionally managed in accordance with the relevant Deed of Trust. Unit Trusts charge a management fee for this.
Instead of investing with a limited amount of capital, a unit trust always diversifies its investments, thus reducing the risk. Another advantage is that they always have a trustee who represents the investor’s expectations. There are three main types of unit trusts:
Open / Unlimited Funds. The unit trust management company is obligated to buy the shares of its investors. Recurring / Limited Funds. These trusts only issue one share to the public. If an investor wants to sell shares for some reason, they should do so in the secondary market.
Deed of trust. A unit trust fund is set up under a trust deed and is held by the investor. The investment is held by the Trust Fund on behalf of the investor (also called the unit trustee) for the period specified in the trust deed. This means that unit trusts are temporary. These funds provide a direct refund to the investor, and the inflows are not reinvested in the fund itself.