An investment vehicle pooling funds from multiple investors and entrusting the selection and management of assets to a professional fund manager is a common financial instrument. These trusts often invest in a diversified portfolio, which may include stocks, bonds, property, or other assets, according to the trust’s stated investment objectives. Distributions, typically in the form of income and/or capital gains, are paid to the investors, also known as unitholders, periodically. As an illustration, an entity might focus on generating income through investment in high-yield corporate bonds, distributing regular payments to its unitholders.
The advantage of this investment structure lies in its potential to offer access to professionally managed portfolios and diversification benefits that might not be readily achievable by individual investors. Furthermore, it facilitates access to asset classes or investment strategies that might otherwise be difficult for smaller investors to enter. The concept has evolved over time, responding to changing market conditions and investor demands, leading to a wide array of specific investment mandates and strategies.
