What is the primary role of Unit Trusts or Mutual Funds?

The primary role of Unit Trusts or Mutual Funds is to collect funds from small investors and invest in specific financial assets. These investment vehicles pool money from many individuals, allowing them to collectively invest in a diversified portfolio of assets such as stocks, bonds, or other securities. This pooling helps small investors access a broader range of investment opportunities that they may not be able to afford or manage on their own.

By investing in a mutual fund, individuals benefit from professional management, diversification, and economies of scale, which can lead to reduced risks and costs associated with investing. This collective investment approach is especially helpful for those who may lack the expertise or resources to directly manage their investments.

Other options presented focus on narrower financial activities that do not capture the primary function of mutual funds. Some suggest specific investment types like government securities or emphasize lending practices, which are not central to the operations of mutual funds. The nature of mutual funds is more about pooling and diversifying investor funds rather than focusing on specific investment types or corporate share exchanges.