A Unit Trust is a type of investment fund where money from multiple investors is pooled together and invested in a diversified portfolio of assets like stocks, bonds, and securities.
A Unit Trust is a collective investment scheme managed by professional fund managers. Investors buy “units” in the fund, and each unit represents a share of the overall portfolio. The value of these units changes based on the performance of the underlying assets.
Unit trusts are similar to mutual funds and are popular among investors who want diversification without directly managing investments. The fund manager decides where to invest based on the fund’s objective—such as growth, income, or balanced strategy.
Key features of unit trusts include:
Returns from unit trusts depend on market performance, making them suitable for medium to long-term investors.
"An investor invests ₹50,000 in a unit trust fund. The fund pools money from many investors and invests in stocks and bonds. As the value of these investments increases, the value of the investor’s units also rises."