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Trust vs. Fund: What's the Difference?

Edited by Huma Saeed || By Sawaira Riaz || 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.
Sawaira Riaz
Dec 12, 2023
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.
Sawaira Riaz
Dec 12, 2023
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.
Huma Saeed
Dec 12, 2023
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.
Sawaira Riaz
Dec 12, 2023
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.
Sawaira Riaz
Dec 12, 2023
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Comparison Chart

Nature

Legal relationship for managing assets
Pool of money for investment or specific use
Sawaira Riaz
Dec 12, 2023

Establishment

Created through a legal document
Formed by pooling capital from various sources
Sawaira Riaz
Dec 12, 2023

Purpose

Estate planning, charitable giving, etc.
Investment, supporting projects, scholarships
Huma Saeed
Dec 12, 2023

Governance

Trust law
Investment management principles and financial regulations
Janet White
Dec 12, 2023

Beneficiaries/Contributors

Legal right to assets or income
May receive returns or fund specific activities
Janet White
Dec 12, 2023
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Trust and Fund Definitions

Trust

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.
Sawaira Riaz
Nov 22, 2023

Fund

It can be used for collective investment, like in mutual or pension funds.
Her retirement savings are invested in a diverse mutual fund.
Sawaira Riaz
Nov 22, 2023

Trust

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.
Sawaira Riaz
Nov 22, 2023

Fund

Funds are often gathered from multiple contributors, such as investors or donors.
They contributed to a fund supporting local businesses.
Harlon Moss
Nov 22, 2023

Trust

Trusts can also serve charitable purposes, supporting causes and organizations.
The trust donated annually to her favorite charity.
Sawaira Riaz
Nov 22, 2023

Fund

Funds also encompass governmental or non-profit funding for various initiatives.
The government fund was allocated for infrastructure development.
Sawaira Riaz
Nov 22, 2023

Trust

Trusts are used for estate planning, protecting assets, and ensuring proper distribution.
Their family trust was designed to minimize estate taxes.
Aimie Carlson
Nov 22, 2023

Fund

A fund can be a reserve of money for emergencies or specific projects.
The company established a contingency fund for unforeseen expenses.
Aimie Carlson
Nov 22, 2023

Trust

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.
Sawaira Riaz
Nov 22, 2023

Fund

A fund is a pool of money set aside for a specific purpose or investment.
The scholarship fund helps talented students afford college.
Huma Saeed
Nov 22, 2023

Trust

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.
Sawaira Riaz
Nov 19, 2023

Fund

A source of supply; a stock
A fund of goodwill.
Sawaira Riaz
Nov 19, 2023

Trust

The condition and resulting obligation of having confidence placed in one
Violated a public trust.
Sawaira Riaz
Nov 19, 2023

Fund

A sum of money or other resources set aside for a specific purpose
A pension fund.
Sawaira Riaz
Nov 19, 2023

FAQs

What is the purpose of a fund?

To pool money for investment or a specific project or cause.
Huma Saeed
Dec 12, 2023

Can a trust be changed?

It depends on whether the trust is revocable or irrevocable.
Aimie Carlson
Dec 12, 2023

How is a trust established?

Through a legal document specifying terms and beneficiaries.
Sawaira Riaz
Dec 12, 2023

What are common types of funds?

Mutual funds, pension funds, and charity funds are common types.
Harlon Moss
Dec 12, 2023

Who manages a fund?

Typically, fund managers or investment professionals.
Sawaira Riaz
Dec 12, 2023

Are trusts taxable?

Trusts can be subject to different tax regulations based on their structure.
Sawaira Riaz
Dec 12, 2023

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.
Aimie Carlson
Dec 12, 2023

How do funds generate income?

Through investments or contributions from multiple sources.
Janet White
Dec 12, 2023

What defines a trust?

A legal entity where assets are managed by a trustee for a beneficiary.
Sawaira Riaz
Dec 12, 2023

What's the role of a trustee?

To manage the trust's assets in the best interest of the beneficiary.
Sawaira Riaz
Dec 12, 2023

Are funds accessible to the public?

Some funds, like mutual funds, are accessible, while others may be private.
Aimie Carlson
Dec 12, 2023

Are trusts only for the wealthy?

No, they can be used by anyone for various purposes.
Sawaira Riaz
Dec 12, 2023

What risks are associated with funds?

Market risks, investment risks, and potential mismanagement.
Janet White
Dec 12, 2023

Can trusts be used for charitable purposes?

Yes, charitable trusts support various causes and organizations.
Harlon Moss
Dec 12, 2023

Do funds have a specific legal structure?

They can vary, but often operate within regulatory frameworks.
Sawaira Riaz
Dec 12, 2023

Can individuals start a fund?

Yes, individuals can start funds for various purposes.
Harlon Moss
Dec 12, 2023

What is a beneficiary in a trust?

The person or entity entitled to the trust's assets or income.
Sawaira Riaz
Dec 12, 2023

Can a trust own property?

Yes, trusts can hold various types of assets, including property.
Janet White
Dec 12, 2023

Who can set up a trust?

Any individual or entity wishing to manage assets for a specific purpose.
Harlon Moss
Dec 12, 2023

How is a fund's performance measured?

Typically by its return on investment or achievement of its specific purpose.
Janet White
Dec 12, 2023
About Author
Written by
Sawaira Riaz
Sawaira is a dedicated content editor at difference.wiki, where she meticulously refines articles to ensure clarity and accuracy. With a keen eye for detail, she upholds the site's commitment to delivering insightful and precise content.
Edited by
Huma Saeed
Huma is a renowned researcher acclaimed for her innovative work in Difference Wiki. Her dedication has led to key breakthroughs, establishing her prominence in academia. Her contributions continually inspire and guide her field.

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