Unit trust (UT) meaning

A unit trust is a pooled investment fund constituted as a trust: investors hold units and trustees hold the fund’s assets on trust for the unitholders. In the UK, a unit trust is a form of collective investment scheme (fsma 2000, s.237) under which property is held on trust for participants; it is distinct from a contractual scheme. The trustees hold legal title and owe fiduciary duties to apply the assets for unitholders’ benefit. A manager (in authorised schemes, the authorised fund manager) provides portfolio management, with the trustee acting as custodian/oversight. Unit trusts are commonly used as retail or institutional investment vehicles. For UK tax purposes, unit trusts are categorised as: unauthorised unit trusts (UUTs), being unit trusts not authorised under FSMA 2000; and authorised unit trusts (AUTs), being schemes authorised by the Financial Conduct Authority under s.243 FSMA. The categories carry distinct tax and regulatory consequences. Usage is broadly consistent across England & Wales, Scotland and Northern Ireland. In Ireland, “unit trust” similarly denotes a trust-based collective investment scheme authorised under Irish legislation by the Central Bank of Ireland, with comparable trustee and management roles, though regulatory frameworks differ.