Unit Trusts

Unit Trusts (sometimes referred to simply as ‘funds’) are collective investments run by fund management companies. The fund manager buys a range of shares in different companies that are pooled in a fund, the value of which can be worth many millions of pounds. This helps to spread risk. So, if one company has a bad spell or even goes bust, its impact on the fund is relatively small. These funds are divided into units of equal value. The number of units you personally hold depends on how much you have invested. The price of units rises and falls in line with the value of the investments in the fund.

Because shares are traded on the stock exchange, the total value of the shares held by the fund can move up and down from day to day as share prices move. As an investor, you buy units in the hope that the value of your units rises over time as the prices of the underlying shares increase. As with most investments, there are charges, which vary between funds, that investors have to pay to cover the expenses of managing funds.

In short, Unit Trusts offer:

• Potential for higher growth / income than cash deposits.
• A variety of asset classes to help beat cash.
• Flexibility to allow lump sum or regular investment.
• A Fund manager who pools funds to invest across a range of different stocks – diversification within one asset class.
• Funds not subject to Capital Gains Tax.
• Basic rate taxpayers – no further subjection to income tax liability.

Legal & General’s Financial Advisers, who are based in local Bradford & Bingley branches, are able to offer you investments through a large number of specially selected funds, giving you access to some of the best performing funds on the market.