Unit trusts are a type of mutual fund that passes profits directly to the investor rather than reinvesting it back into the fund. They are different from ETFs in that by investing in a unit trust, you are buying a part of the deed to the companies you are investing in. Effectively, you are becoming a beneficiary of the trust. Unit trusts, unlike ETFs, typically have lower fees since fund managers do not actively trade unit trusts. Instead, securities are bought and sold only when there is a change in one of the company's profiles (i.e., merger or bankruptcy). On the other hand, unit trusts are similar to ETFs in that both invest in a variety of sectors and carry lower risks than if you were to invest completely in individual stocks. Furthermore, both unit trusts and ETFs are managed for you, meaning you can be a "passive" investor. Thus, while both are similar in the investor's role, the major difference is the structure of the investment. Unit trusts are therefore better for people who are happy to invest with a set group of companies with little change. To understand more, read our article on the differences between unit trusts and ETFs.