Unit Trust
The Unit Trust is a form of collective Investments on the basis of a Fiduciary ratio (English trust deed ). The most important rules are laid down in the unit trust statute (see also fund prospectus ).
Unit trusts are set up in Great Britain , the Isle of Man , Jersey , Ireland , South Africa , Singapore , Australia and New Zealand as an alternative to investment company (fund company) and contract funds (joint ownership). Unit trusts are open capital investments . Each such fund has specifications for the breadth and depth of investment, which specify the investment objective and limits for the fund management.
history
The first investment trust ( investment company ) was launched in Great Britain as a fixed trust under the name The Foreign and Colonial Government Trust and was presented to the public on March 20, 1868 in the Times . More than two hundred investment trusts were launched in Great Britain from 1870 to 1930. The majority of these trusts were organized in the legal form of a limited liability company .
The UK's first Unit Trust was set up by M&G in 1931, based on US templates (based on the idea of Ian Fairbairn). The reason for the creation of the first unit trust was that during the stock market crash of 1929 it became clear that the open-ended investment funds in the USA survived this crisis in a relatively stable manner. This should be followed by the creation of a unit trust for the benefit and protection of investors in the UK.
This first British unit trust was launched as The First British Fixed Trust . The fund's assets were invested in the shares of 24 leading companies. This investment was guaranteed for 20 years and not changed - hence the name “ fixed trust ”. It was therefore a passively managed fund.
The First British Fixed Trust was re-launched as the M&G General Trust and later renamed the Blue Chip Fund .
The first actively managed unit trust was launched in 1934 as The Foreign Government Bond Trust .
By 1939 there were around 100 trusts in Britain. They managed around £ 80 million .
Legal regulations
As early as December 1935, the London Stock Exchange published a report on (fixed) unit trusts and recommended statutory regulation to protect investors. The London Stock Exchange did not find itself in a position to guarantee this protection. In 1939 the first statutory regulation in this regard was passed in Great Britain, the Prevention of Fraud (Investments) Bill . +
In the EU , all national legal regulations on the investment and management of funds have largely been adapted to the UCITS Directive and the Financial Market Directive as well as international standards.
Fund organization
Various roles are important in the fund organization. The fund manager is working to generate a profit for the fund. His main task is to select and manage the investments in the fund. The fund management (in the unit trust of the trustee, English trustee ), however, ensures and controls that the fund manager adheres to the investment goals of the fund and safeguards the fund assets. The fund management of the unit trust is usually the legal owner of the fund assets; the proportion Represent beneficiaries (in proportion to their investment) without explicit co-ownership of assets of the unit trusts. The fund dealers provide access to the unit trust for the unitholders, e. B. Banks . The registrars are usually engaged by the fund manager and usually act as an intermediary between the various fund managers and other interest groups as well as the authorities.
Access to the fund
Unit trusts are open to new shareholders for the duration of the fund. The fund is divided into shares that are directly proportional to the change in the value of the fund. If assets are added to the fund, new units are issued. If units are redeemed, the number of units in the fund is reduced accordingly. According to this system, the number of units always reflects the fund's assets. Units of unit trusts themselves are usually traded without commissions.
Share trading
Units in unit trusts can be purchased directly from fund management or through dealers (e.g. banks). The fund manager makes its profit from the difference between the current sales and buying rate ( money and letter ) of shares, so the bid-ask spread. This range depends on the type of assets in which the fund is invested and their market development (generally: the better the market development of the fund, the greater the demand for fund units). The unit trust statute also often gives the fund manager the right to influence the bid-ask spread based on market conditions. This enables the fund manager to control the liquidity of the fund, among other things.
The following four factors are important when determining the price for fund units:
- Performance of the invested assets
- Number of fund units issued or authorized for issue
- taxes and expenses
- Binding specifications on the design and the amount of the issue price.
Net asset value
A share is issued when money is invested in the fund and redeemed when the share is redeemed.
The current selling and buying prices differ from the initial issue price (English creation price ) as well as the binding redemption price set in advance in the event of fund dissolution (English cancellation price or redemption price ), depending on market and fund developments.
Subject to regulatory and statutory provisions, these prices may differ more or less and relate to the current market value of the fund's assets on the day of investment. The profits from buying and selling units at the current daily price are called box profits .
Comparison with the investment company
In the UK, many unit trusts have been converted by their fund managers into investment companies ( e.g. SICAV , AG with variable capital or SE ) in recent years . The reasons for this are greater transparency with regard to the unit value and fees as well as better sales opportunities. The unit trusts have largely been replaced by the investment companies.
Investment companies usually only have one buying and one selling price. Investment companies are recognized and widespread worldwide and the calculation of the purchase and sale price based on the net asset value (NAV) is based on standardized rules.
literature
- Martin J. Day; Paul I. Harris: Unit Trusts . 1st edition. Oyez Publishing, London 1974, ISBN 0-85120-196-2 .
- Christine Stopp: Unit Trusts . 1st edition. Financial Times Business Information, London 1988, ISBN 1-85334-017-0 .
Sources and References
- ↑ After Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, p. 2.
- ↑ After Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, pp. 2 ff
- ↑ After Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, pp. 2 ff, 5, the passively managed funds have rapidly lost importance. For this reason, these passively managed funds were not discussed in detail in the book mentioned.
- ↑ Source: M&G
- ↑ After Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, p. 4.
- ↑ Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, p. 5 gives a number of 73 unit trusts at the beginning of 1938, which were administered by fourteen different fund management companies or groups.
- ↑ Source: M&G. Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, p. 5 (1938).
- ↑ This law was replaced by the Prevention of Fraud (Investments) Act in 1958 .
- ↑ Paragraph quoted from: Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, pp. 55 f.
- ↑ Christine Stopp in " Unit Trusts ", Financial Times Business Information, London 1988, pp. 118 ff, and Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, pp. 49 ff, 80 ff.
- ↑ Martin J. Day; Paul I. Harris in "Unit Trusts", Oyez Publishing, London 1974, p. 49.
