Managers of unit trusts pool money together from a broad range of investors and invest it in a managed portfolio of shares, either on the United Kingdom stock market or any other international market. This makes it possible for the private investor to obtain a globally diversified investment portfolio whilst also reducing risk compared to holding direct investments in a small number of individual companies.
However the investor should always be aware that the value of the units could fall as well as rise in response to stock market movements and, although units can be sold at any time, they may need to retain the investment during periods of depressed market conditions. As the level of risk associated with individual funds can vary substantially it is important to choose funds compatible with an investor’s personal attitude to risk.
Posted in: Investments
