## Important to Know: Trust, REIT, and Funds — What's the Difference?

Investors interested in investment tools often want to understand Trusts but get confused with REITs and mutual funds, as these terms frequently appear on screens. In reality, these three are not the same. Although all are asset management channels, their details and practical applications differ significantly.

**What exactly is a (Trust)?**

A Trust is a legal mechanism used to have a trustworthy (Trustee) manage assets on behalf of the owner. The trustee manages the assets to generate profits and then distributes the income back to the beneficiaries (Unit Holders).

Simply put: A Trust is a system that allows various assets (cash, land, stocks, bonds) to be entrusted to professionals for management, with profits returned to investors.

## Trust vs REIT: What's the Difference?

Many think REIT = Trust, but that's not always correct.

**REIT (Real Estate Investment Trust)** is a Trust established specifically to manage real estate only — such as apartments, rental rooms, shopping centers. These can all be REITs. However, a Trust in general is broader and can manage various types of assets, not limited to real estate.

Another point: REITs and Trusts are similar in that neither has a legal entity status, and both are established through contracts.

## Trust vs Mutual Funds: Key Differences

Mutual Funds (Fund) may seem similar to Trusts, but they are not.

Funds: Pool money from investors and invest according to a set objective. When profits are earned, they are distributed as dividends.

Trusts: Similar but different in that... Funds are legal entities under law, whereas Trusts are not.

## Three Key Parties Involved in a Trust

1. **Settlor (Founder)**: The original owner of the assets who places them into the Trust.

2. **Trustee (Manager)**: A professional who manages the Settlor’s money, must follow the agreed contract. They receive management fees but do not share in the profits.

3. **Beneficiary (Recipient)**: The person who receives dividends from the Trust, mostly Unit Holders.

## Trusts Established for Benefits

Trusts are not a new concept; they date back to Roman times, used for estate management. In medieval England, nobles would entrust land to trusted friends during wartime, who would manage it and send income to their families.

The benefits of Trusts can be summarized as:
- Distributing returns to third parties without transferring ownership
- Managing assets according to the owner’s purpose
- Potential tax benefits (depending on each country's laws)
- Revocable Trusts help professionals manage assets when owners are ill or incapacitated
- Highly flexible in setting up and modifying

## Trusts in Thailand: How Many Types and How to Invest?

In Thailand, the SEC permits Trusts only for fundraising in the capital markets. There are two types:

**1. Active Trust** — Established to manage assets for profit, such as:
- II/HNW Trust Funds (Trust for institutional investors/wealthy individuals)
- REIT (Real Estate Investment Trust) for real estate investments

**2. Passive Trust** — Used to manage specific assets, such as:
- ESOP (Trust for employee stock ownership plans)
- EJIP (Trust for employer-employee joint investment projects)
- Reserve Account (for setting up reserve funds)

Currently, most Thai investors recognize Trusts as REITs investing in real estate because these assets are easier to verify, making it simpler for beginners to buy and sell.

## Summary: Is a Trust Real or Just a Concept?

A Trust is an old asset management tool that remains useful today. Originally used for estate management, it can now manage almost all types of assets.

If it manages only real estate, it can be called a REIT. A REIT that generates income for investors when managed properly can pay dividends to unit holders.

Therefore, Trusts are another investment channel for those who want to access large assets but have limited budgets.