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Trust vs. Fund: What's the Difference?

Edited by Aimie Carlson || By Janet White || Published on December 12, 2023
A trust is a legal arrangement where one party holds assets for another's benefit, while a fund is a pool of money set aside for a specific purpose or investment.

Key Differences

A trust involves a legal relationship where a trustee holds and manages assets for the benefit of a beneficiary. In contrast, a fund is a collection of money, often invested, to achieve certain financial goals or support specific activities.
Trusts are established through a legal document outlining terms for managing and distributing assets. Funds, however, are typically pools of capital, gathered from various sources, used for investment or specific projects.
The purpose of a trust can vary from estate planning to charitable giving, involving a fiduciary responsibility by the trustee. Funds are often used for collective investment schemes, like mutual funds, or for specific purposes like scholarships.
Trusts are governed by trust law, which dictates how the trust operates and is managed. Funds operate under the principles of investment management and are often regulated by financial authorities.
Beneficiaries of a trust have a legal right to the assets or income as per the trust's terms, while contributors to a fund may receive returns based on the fund's performance or have their contributions used for a designated purpose.

Comparison Chart


Legal relationship for managing assets
Pool of money for investment or specific use


Created through a legal document
Formed by pooling capital from various sources


Estate planning, charitable giving, etc.
Investment, supporting projects, scholarships


Trust law
Investment management principles and financial regulations


Legal right to assets or income
May receive returns or fund specific activities

Trust and Fund Definitions


A trust is a legal entity where a trustee holds assets for a beneficiary's benefit.
She set up a trust to manage her estate for her children.


It can be used for collective investment, like in mutual or pension funds.
Her retirement savings are invested in a diverse mutual fund.


It involves a fiduciary duty where the trustee must act in the best interest of the beneficiary.
The trustee managed the trust with utmost diligence and care.


Funds are often gathered from multiple contributors, such as investors or donors.
They contributed to a fund supporting local businesses.


Trusts can also serve charitable purposes, supporting causes and organizations.
The trust donated annually to her favorite charity.


Funds also encompass governmental or non-profit funding for various initiatives.
The government fund was allocated for infrastructure development.


Trusts are used for estate planning, protecting assets, and ensuring proper distribution.
Their family trust was designed to minimize estate taxes.


A fund can be a reserve of money for emergencies or specific projects.
The company established a contingency fund for unforeseen expenses.


A trust can be revocable or irrevocable, determining the control over the assets.
He chose an irrevocable trust to safeguard the assets from legal claims.


A fund is a pool of money set aside for a specific purpose or investment.
The scholarship fund helps talented students afford college.


Firm belief in the integrity, ability, or character of a person or thing; confidence or reliance
Trying to gain our clients' trust.
Taking it on trust that our friend is telling the truth.


A source of supply; a stock
A fund of goodwill.


The condition and resulting obligation of having confidence placed in one
Violated a public trust.


A sum of money or other resources set aside for a specific purpose
A pension fund.


What is the purpose of a fund?

To pool money for investment or a specific project or cause.

Can a trust be changed?

It depends on whether the trust is revocable or irrevocable.

How is a trust established?

Through a legal document specifying terms and beneficiaries.

What are common types of funds?

Mutual funds, pension funds, and charity funds are common types.

Who manages a fund?

Typically, fund managers or investment professionals.

Are trusts taxable?

Trusts can be subject to different tax regulations based on their structure.

What's the difference between a fund and a bank account?

Funds are pooled investments or reserves, while bank accounts are personal or business depositories.

How do funds generate income?

Through investments or contributions from multiple sources.

What defines a trust?

A legal entity where assets are managed by a trustee for a beneficiary.

What's the role of a trustee?

To manage the trust's assets in the best interest of the beneficiary.

Are funds accessible to the public?

Some funds, like mutual funds, are accessible, while others may be private.

Are trusts only for the wealthy?

No, they can be used by anyone for various purposes.

What risks are associated with funds?

Market risks, investment risks, and potential mismanagement.

Can trusts be used for charitable purposes?

Yes, charitable trusts support various causes and organizations.

Do funds have a specific legal structure?

They can vary, but often operate within regulatory frameworks.

Can individuals start a fund?

Yes, individuals can start funds for various purposes.

What is a beneficiary in a trust?

The person or entity entitled to the trust's assets or income.

Can a trust own property?

Yes, trusts can hold various types of assets, including property.

Who can set up a trust?

Any individual or entity wishing to manage assets for a specific purpose.

How is a fund's performance measured?

Typically by its return on investment or achievement of its specific purpose.
About Author
Written by
Janet White
Janet White has been an esteemed writer and blogger for Difference Wiki. Holding a Master's degree in Science and Medical Journalism from the prestigious Boston University, she has consistently demonstrated her expertise and passion for her field. When she's not immersed in her work, Janet relishes her time exercising, delving into a good book, and cherishing moments with friends and family.
Edited by
Aimie Carlson
Aimie Carlson, holding a master's degree in English literature, is a fervent English language enthusiast. She lends her writing talents to Difference Wiki, a prominent website that specializes in comparisons, offering readers insightful analyses that both captivate and inform.

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