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Fund Unit (Participation Share)

A fund unit is a book-entry capital market instrument that represents an investor’s participation in an investment fund and carries the investor’s rights in the fund. An investor in a fund buys its units and becomes entitled to the fund’s total value in proportion to the units held.
Contents
  1. 1.Key points
  2. 2.Formula / calculation
  3. 3.Worked example
  4. 4.Interpretation
  5. 5.Pitfalls
  6. 6.Official sources
  7. 7.Frequently asked questions

Key Points

  • Units are not issued as paper certificates; they are recorded electronically in the Central Registry Agency (MKK) system.
  • A unitholder owns a proportional share of the whole fund rather than individual portfolio assets.
  • because unit prices differ between funds, unit counts cannot be compared; a low unit price does not make a fund cheap.

Formula / Calculation

Unit price = Total fund value / Units outstanding. Investor holding = Units held × Unit price. The number of units bought is the amount invested divided by the unit price.

Worked Example

Illustrative

Investing TRY 50,000 in a fund with a unit price of TRY 1.250000 buys 50,000 / 1.25 = 40,000 units. If the unit price rises to TRY 1.375000 the holding is worth 40,000 × 1.375 = TRY 55,000, a 10% return.

The figures are hypothetical values chosen to explain the concept; they are not data for any real fund, stock or market.

Interpretation

The definition is set out in the CMB’s Communiqué on Principles Regarding Investment Funds (III-52.1).

A unitholder owns a proportional share of the whole fund rather than individual portfolio assets. The fund’s return shows up as a change in the unit price, and in a liquidation payments are also made in proportion to units held.

Pitfalls

because unit prices differ between funds, unit counts cannot be compared; a low unit price does not make a fund cheap. Depending on the fund type, an order may fill at the next price, unknown when the order is placed. Compare returns using percentage changes, not the unit price itself.

Official Sources

Official regulation and sources the definition is based on.

Pages Where This Term Appears

Related Terms

Frequently Asked Questions

A fund unit is a book-entry capital market instrument that represents an investor’s participation in an investment fund and carries the investor’s rights in the fund.

Unit price = Total fund value / Units outstanding. Investor holding = Units held × Unit price. The number of units bought is the amount invested divided by the unit price.

Prepared by: Yatırımcı.AI Research TeamLast reviewed: Method: MethodologyEditorial policy