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LSDefine
Simple English definitions for legal terms
Master Trust
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A quick definition of Master Trust:
A master trust is like a big piggy bank where lots of people put their money together to be managed by someone else. This is helpful because it makes it cheaper to manage the money and invest it in things like retirement or employee benefits. It's like sharing a pizza instead of buying your own, it's cheaper and easier to manage when everyone puts their money together.
A more thorough explanation:
A master trust is a type of investment vehicle that combines assets from multiple sources for collective management. It is similar to a pooled trust, where assets are managed in a central fund.
For example, an employer can use a master trust to pool the investments in a pension or employee benefit plan. This allows the portfolio manager to manage a single pool of investments, which can reduce transaction costs and provide access to less expensive share classes and overall fees.
The benefit of a master trust is that it provides greater economies of scale, which means that investors can pool their investments together. This can result in lower costs and better returns for everyone involved.
Overall, a master trust is a useful tool for managing investments and can be particularly beneficial for large organizations with many investors.