Many investors have only limited familiarity with Unit Investment Trusts (UITs). And yet they are one of the fastest growing investment products on the market today. Think of a UIT as a predefined basket of investment holdings that satisfy a specific objective.
Wide Variety
Like real baskets, UITs come in many shapes and sizes. Municipal bonds used to dominate the UIT arena. But today, the vast majority of UITs being offered are equity–based. You can choose UITs that focus on a market sector or index, corporate bonds, Treasury bonds, and more.
Stability and Liquidity
UITs generally stay 100% invested. And compared to managed portfolios––which may buy or sell holdings at a whim––UITs rarely spring surprises. Holding the same positions keeps expenses down and is more tax efficient. And yet UITs offer ample liquidity. Holders usually may buy and sell "units" of the trust much like a standard stock.
A Finite Ride
From their launch, UITs state the date at which the Trust will be dissolved. The typical life of an equity UIT is anywhere from 13 months to 5 years. If the UIT holds bonds, the portfolio will remain intact until the bonds mature or are called––which may be 20 or 30 years down the road.
UITs can help you diversify your holdings, control taxes, and retain liquidity. Talk to your Financial Consultant to see if UITs have a place in your portfolio. Or explore the links to learn more.
|
