What Does It Mean if a Fund is Unitized

A unitized fund, also known as an open-end fund, is a type of collective investment scheme where investors buy and sell units in the fund, so the price of each unit is calculated by dividing the total value of the fund’s investments by the number of outstanding units. This means that as the fund’s assets fluctuate in value, so does the price of each unit. However, the total number of units in issue remains constant, ensuring that all investors share in the fund’s performance.

Understanding Fund Units

Fund units represent ownership interests in a mutual fund or exchange-traded fund (ETF). When a fund is unitized, each unit represents a share of the fund’s net assets, similar to shares in a publicly traded company.

Benefits of Unit Trust Structure

  • Transparency
  • Flexibility
  • Affordability
  • Diversification

How Fund Units Work

When you buy fund units, you are essentially purchasing a portion of the fund’s diversified portfolio of investments. The value of your units will fluctuate based on the performance of the underlying investments.

Net Asset Value (NAV)

The NAV per unit is calculated by dividing the fund’s total net assets (market value of assets minus liabilities) by the total number of outstanding units. NAV is typically calculated daily and is used to determine the price at which you can buy or sell fund units.

Example of Fund Unit Calculation

Fund InformationUnit Value
Total net assets$1 million
Number of outstanding units200,000
Net Asset Value (NAV)$1 million / 200,000 = $5 per unit

Unitization of Funds

Unitization is a process of dividing a fund’s total assets into smaller, equal units known as units. Each unit represents a proportional ownership stake in the fund.

When a fund is unitized, each unit holder owns a fraction of the fund’s underlying investments, including stocks, bonds, or other assets.

Implications for Investors

  • Transparency: Unitizing a fund provides investors with a clear understanding of their ownership and the proportionate value of their investments.
  • Flexibility: Investors can easily purchase or redeem units of the fund, allowing them to adjust their investments as needed.
  • Lower Entry Threshold: Unitizing funds can lower the minimum investment amount, making them more accessible to a wider range of investors.
  • Diversification: Unit trusts offer investors instant diversification, allowing them to invest in a range of assets in a single investment vehicle.
  • Liquidity: Unitizing facilitates faster and more efficient transactions since units can be traded on exchanges or over-the-counter markets.
  • Convenience: Investors can easily track the value and performance of their investments through fund updates and online platforms.

    Table Summarizing Unit Trust Features

    UnitsEqual ownership stakes in the fund
    TransparencyClear understanding of ownership and asset values
    FlexibilityEasy purchase and redemption of units
    DiversificationExposure to a range of assets

    What Does It Mean if a Fund is Unitized?

    When a fund is unitized, it means that the fund’s assets are divided into units, and each unit represents a portion of the fund’s total value. This is in contrast to traditional fund structures, where investors purchase shares of the fund itself, rather than units of the fund’s assets.

    Comparison to Traditional Fund Structures

    • Transparency: Unitizing a fund provides investors with greater transparency into the fund’s underlying assets, as each unit represents a specific portion of the fund’s portfolio.
    • Flexibility: Unit trusts offer more flexibility to investors, as they can buy and sell units at any time, without having to wait for the fund to trade.
    • Cost efficiency: Unitizing a fund can be more cost-efficient, as it eliminates the need for a fund manager to actively manage the fund’s portfolio.


    The structure of a unitized fund is typically as follows:

    1. The fund’s assets are divided into units.
    2. Investors purchase units of the fund.
    3. The fund’s net asset value (NAV) is calculated daily, and each unit represents a portion of the NAV.
    4. Investors can buy and sell units at any time, based on the NAV.

    Table: Comparison of Unitizing and Traditional Fund Structures

    FeatureUnitized FundTraditional Fund
    StructureInvestors purchase units of the fund’s assetsInvestors purchase shares of the fund itself
    Cost efficiencyHighLow