A unit trust is a type of pooled investment, similar in many respects to a single OEIC sub-fund. In a unit trust, your money is pooled with that of other investors and used to purchase units. Each unit represents a fraction of the underlying investments held by the unit trust. As the name suggests, a unit trust has a trust framework, with the investments held by an independent trustee.
Unit trusts first appeared in the 1930s and for many years were the main way for individual investors to obtain a managed spread of equity investments. In the past few years many unit trusts have converted to OEICs.
| Advantages of investing via a unit trust |
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You gain several important benefits from pooling your money in a unit trust with other investors:
| Differences between unit trusts and OEICs |
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The major practical difference for you as an investor is the way that units in unit trusts are priced compared to OEIC fund pricing.
Normally unit trusts are dual priced, which means they quote a buying (or offer) price and a lower selling (or bid) price. The offer price includes an initial charge. The complex unit trust pricing rules mean, however, that the difference between buying and selling prices is often not the same as the initial charge.
Shares in OEICs have a single price at which all deals take place, with new investors also paying a separate initial charge.
To learn more about New Star's unit trusts, we recommend that you talk to a financial adviser. Search for your nearest Independent Financial Adviser (IFA) or view our full range of New Star unit trusts.