Unauthorised unit trusts

What are unauthorised unit trusts (UUTs)?

Unit trusts, as a vehicle-type, are chiefly used as investment vehicles. An ‘unauthorised’ unit trust (UUT) is a unit trust that has not been authorised by the Financial Conduct Authority under the Financial Services and Markets Act 2000 (FSMA 2000).

Unit trusts are constituted by trustees holding assets on trust for unitholders. The trustees hold the legal title to the fund's assets but are legally obliged to apply the assets for the benefit of the unitholders. A fund manager will provide investment advice to the trustees.

Investment in a unit trust can only be promoted to the UK general public (retail investors) if the unit trust has been authorised under FSMA 2000. However, in order to obtain authorisation under FSMA 2000, a unit trust must comply with a number of different regulatory provisions, including restrictions on its investment powers. Since UUTs do not have to comply with these more restrictive regulations, they have greater investment flexibility and freedom, but at the cost that they can only be marketed to a more limited class of investors—broadly

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