Chartered Institute of Stockbrokers (CISI) Professional Practice Exam

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What is the principal role of a unit trust manager?

To provide legal advice to shareholders.
Deciding where the money is to be invested.
To manage shareholder communications.
To verify financial transactions.

The correct answer is: Deciding where the money is to be invested.

The principal role of a unit trust manager centers on the responsibility for investment decisions, which involves determining where the funds collected from unit holders will be allocated. The manager conducts thorough research and analysis on various investment opportunities, assessing the potential return and risk associated with different asset classes such as stocks, bonds, and other securities. This role is crucial as it directly impacts the performance of the unit trust and, consequently, the returns for investors. The unit trust manager must stay informed about market trends, economic indicators, and other factors that may influence investment outcomes. Their decisions aim to align with the stated investment objectives of the trust, ensuring that the unit holders' interests are prioritized and that there is effective portfolio management in place. While other responsibilities such as managing shareholder communications and verifying transactions are essential aspects of the unit trust's overall operations, they do not represent the central function of a unit trust manager as it specifically pertains to investment strategy and execution.