What are 'unit trusts'? Definition & meaning

A collective investment scheme the investors pay money into in exchange for units. The money is invested in a diversified portfolio of assets.

More terms

Ponzi Scheme

A form of fraud designed to lure new investors, and pays the earlier backers by using the new investors' money.

After-hours trading

Trading outside of a stock exchange's opening hours.

Nominal amount

The face value of a gilt. It represents the amount that will be repaid to the holder at maturity and is also used to calculate the dividend or coupon payment.

Exchange-Traded Fund (ETF)

A collection of investments, pooled into a single fund that can be bought and sold on a stock exchange.

Inflation

The increase in the prices of goods and services over time, and the process by which money loses its value.

American Depository Receipts (ADRs)

Tradeable assets that let Americans invest in overseas stocks using US laws and dollars.

Running yield

The annual interest payment (dividend) divided by the current market price of a bond.

Synthetic ETFs

An ETF that that reproduces the return of an index through the use of swaps.

Coupon

Also called a dividend, this is the fixed annual interest paid to gilt holders. It’s usually paid in two equal, semi-annual instalments and expressed as a percentage of the nominal value of the gilt.

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Unit Trusts