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I'm trying to understand how listed open-ended funds (LOFs) work in different geographies and I sometimes encounter the term "unit interests." The fact that it is never elaborated on suggests that it is assumed to be somewhat universal, widely known. However, even illustrious online references such as Investopedia don't have an entry for this concept.

Here is an example sentence:

Once approved by the Stock Exchange, the unit interests of a mutual fund can be issued through the trading system of the exchange and become listed as LOFs.

(Source: China's Innovative Fund Products: ETFs And LOFs)

I get some of the overall concepts of LOFs, like how they can ease redemption pressure on the mutual fund itself by allowing investors to redeem cash from a LOF (and not the mutual fund). It's when we get to the actual mechanics of it that I don't understand the process/terms. Perhaps unit interests here means ownership of the equity assets inside the fund (what retail investors pay into the fund). But if that's the case then the fund manager is decreasing the size of the fund anyway, by their own doing.

Question

What is a "unit interest" in the context of a mutual fund?

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In the article, a unit [of] interest is being used to avoid calling the market trading unit of a LOF a "share". A share can refer to the actual investment in the underlying mutual fund. To avoid confusion, the author needs another term to call the market-traded portion of a LOF, so he uses "unit interest" or "unit" in the article.

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  • Remember the "unit circle" from math class, and that it is called the unit because uni- means "one"? Same thing here, because a unit is one thing, not a group (like a gaggle of geese).
    – RonJohn
    Jul 1 at 5:08

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