Unit trusts the basics

A unit trust is a collective investment where a large number of investors pool their money together. These funds are then used to invest in assets such as property, bonds and shares with the aim of making investment profits from capital growth, interest and dividend income.

Each unit trust is divided into a number of equal-sized units, which can be purchased by investors at the buying price and sold back to the fund at the selling price.

You can either invest a lump sum or save regularly each month. The unit trust is valued every day; this means that on any given day you can find out exactly how much your investment is worth and how it's performing.There is no fixed term of investment but unit trusts should be held for the medium to long term, at least 5 years.

There is no maximum to how much can be invested. The price of the units depends on how the underlying investments perform. The number of units allocated to each investor depends on the amount invested.

A unit trust is a different kind of investment to a bank or building society account, where the capital invested is secure. The value of unit trusts can go down as well as up depending on the value of the trust's underlying investments. Neither the capital invested nor the level of any income is guaranteed and you may get back less than you invest.

Unit trusts can be held within a Stocks & Shares ISA or on their own.

Find out what The Co-operative Investments offer.