Series 7

AAA

Packaged Securities - Unit investment trusts (UITs)

Unit investment trust companies are a hybrid of open- and closed-end funds. Like mutual funds, UITs typically issue redeemable securities. However, like closed-end funds, UITs typically make a one-time public offering of a fixed number of shares which are known as units.

  • Many UIT sponsors maintain a secondary market that allows owners of UIT units to sell them back to the sponsors and other investors to buy UIT units from the sponsors.

  • A UIT will have a date when the UIT will terminate and dissolve; this date is established when the UIT is created.

  • However, there is no set lifespan that applies to all UITs, and some may take more than 50 years to terminate.

  • In the case of a UIT investing in bonds, for example, the termination date may be determined by the maturity date of the bond investments.

  • When a UIT terminates, any remaining investment portfolio securities are sold and the proceeds are paid to the investors.

  • A UIT does not actively trade its investment portfolio: rather, it buys a relatively fixed portfolio of securities and holds them with little or no change for the life of the UIT.

  • Because the investment portfolio of a UIT generally is fixed, investors know what they are investing in for the duration of their investment.

  • Investors will find the portfolio securities held by the UIT listed in the UIT's prospectus.

  • A UIT does not have a board of directors, corporate officers or an investment advisor to provide advice during the life of the trust.
Other Types of Investment Companies
comments powered by Disqus
Related Articles
  1. Confirming Price Movements With Volume ...
    Active Trading Fundamentals

    Confirming Price Movements With Volume ...

  2. Essential Strategies For Trading Volume
    Active Trading

    Essential Strategies For Trading Volume

  3. Using Volume Rate Of Change To Confirm ...
    Active Trading Fundamentals

    Using Volume Rate Of Change To Confirm ...

  4. Trading With VWAP And MVWAP
    Forex Education

    Trading With VWAP And MVWAP

  5. On-Balance Volume: The Way To Smart ...
    Technical Indicators

    On-Balance Volume: The Way To Smart ...

Trading Center