What is a business trust?

A business trust is a type of investment vehicle that is set up to hold and manage assets for the benefit of its beneficiaries (investors). It is typically managed by a trustee who is responsible for overseeing the operations of the trust and ensuring that the assets are managed in the best interests of the beneficiaries.

Business trusts are often used in the real estate and infrastructure sectors, where they can hold properties and other income-generating assets on behalf of investors. They provide a way for investors to pool their resources and share in the income generated by the trust's assets.

Business trusts are typically structured as pass-through entities for tax purposes, meaning that the income generated by the trust is passed through to the investors who are then taxed on their share of the income. This can provide tax advantages for investors compared to other types of investment vehicles.

Overall, business trusts can be a flexible and efficient way for investors to gain exposure to a diversified portfolio of assets and receive regular income distributions. However, they also come with risks, such as fluctuations in asset values and potential changes in tax laws that could impact the returns to investors. It is important for investors to carefully consider the risks and benefits before investing in a business trust.