## Trust (Trust) Compared to REITs and Mutual Funds: Which Is Right for You?

Many investors often confuse different investment tools, especially when hearing terms like Trust (Trust), REIT, or mutual fund. Some may think they are the same, but in reality, each has distinct characteristics and operational methods. Here, we will discuss these differences and help you choose the most suitable investment tool.

### Trust (Trust) is the most flexible asset management tool.

A trust fundamentally involves managing money or assets through a middleman called a trustee (Trustee). The settlor (Settlor) transfers assets to the trustee, who then manages and distributes benefits to the beneficiaries (Beneficiary).

What makes a trust special is that it is not limited to managing specific types of assets. It can include cash, real estate, stocks, bonds, businesses, or even tangible assets as long as they generate returns.

( Trusts Come in Many Types Based on Purpose

Setting up a trust can be categorized into various types, such as revocable trusts )Revocable Trust###, which the settlor can cancel or amend at any time, and irrevocable trusts (Irrevocable Trust), which cannot be changed once established.

There are also asset protection trusts (Asset Protection Trust), charitable trusts (Charitable Trust), estate management trusts, or other specific purpose trusts based on the settlor’s needs.

( Benefits of Establishing a Trust

Trusts offer greater flexibility than other asset management methods because they allow conditions and management methods to be adjusted freely. Additional advantages include:

- **Asset Security**: Trusts help protect assets from other legal claims and facilitate smooth inheritance transfer.
- **Tax Benefits**: Depending on the country’s laws, establishing a trust may provide tax advantages for the settlor or beneficiaries.
- **Professional Management**: When the settlor becomes ill or incapacitated, the trustee can continue managing assets without issues.

) Key Components of Setting Up a Trust

For a trust to be legally effective, three elements are required:

1. **Certainty of Word ###Certainty of Word###**: Clear documentation of the settlor’s intent.
2. **Certainty of Subject Matter (Certainty of Subject Matter)**: Assets must be real, tangible, and manageable.
3. **Certainty of Object (Certainty of Object)**: Beneficiaries must be identifiable individuals.

## REITs are trusts specialized in real estate only

Real Estate Investment Trusts – REIT (Real Estate Investment Trust – REIT) are a special type of trust. The main difference is that REITs limit themselves to managing only real estate assets, such as office buildings, shopping malls, hotels, or distribution centers.

Although REITs are trusts, not all trusts are REITs. Trusts can manage various types of assets, making REITs a subset focused solely on real estate.

( Advantages of Investing in REITs

- **Access to Large Assets Easily**: Small investors can invest in large real estate projects without needing huge capital.
- **Stable Cash Flow**: REITs often have long-term lease agreements, providing predictable income.
- **Transparency**: Real estate assets are well-maintained and can be valued consistently.

## Mutual Funds )Fund### Use a Different Structure from Trusts

Mutual funds (Mutual Fund) are a significantly different investment form from trusts. They pool money from many investors to invest in various securities according to the fund’s policy, then distribute the returns to unit holders.

( Legal Differences Between Trusts and Funds

- **Legal Entity**: Mutual funds have legal status, meaning they can hold capital, certificates, or enter into contracts with others. Trusts, however, do not have legal personality under law.
- **Registration**: Mutual funds require official registration and approval from regulatory authorities, whereas trusts are more flexible.

## Types of Trusts Available in Thailand

In Thailand, authorized trusts are divided into two main categories by the Securities and Exchange Commission:

) 1. Active Trusts ### for management and investment

These trusts are established to manage assets for maximum benefit, such as:

- **II/HNW Trust Fund**: For institutional and high-net-worth investors.
- **REIT**: For real estate investment.

### 2. Passive Trusts ( for holding assets

These trusts are set up to manage assets for specific purposes, such as:

- **ESOP Trust**: For issuing and offering shares to executives and employees.
- **EJIP Trust**: For joint investment projects between employers and employees.
- **Reserve Account Trust**: For setting up reserve funds or sinking funds for bond repayment.

Currently, most retail investors in Thailand mainly invest through REITs, which is advantageous because real estate assets are relatively easy to value and manage, making it accessible for beginners.

## Summary: Which type should you invest in?

Trust )Trust### is a highly flexible asset management tool and forms the basis of many investment types, including REITs, which specialize in real estate assets.

If you are an investor looking to invest in large assets but lack substantial capital, REITs are a good choice. If you want flexible money management that can be adjusted according to your needs, other specialized trusts might be suitable. And if you prefer convenient access to a diversified portfolio, mutual funds can offer that variety.