Early Redemption/Exchange
While UITs are designed to be bought and held until they reach termination, investors can sell their holdings back to the issuing investment company at any time. These early redemptions will be paid based on the current underlying value of the holdings. Investors in bond UITs should make particular note of this, because it means that the amount paid to the investor may be less than the amount that would be received if the UIT was held until maturity, as bond prices change with market conditions.

Some UITs permit investors to exchange their holdings for a different UIT at a reduced sales charge. This flexibility can come in handy if your investment objectives change and the UIT in your portfolio no longer meets your needs.

Termination Date
Unlike either mutual funds or closed-end funds, a UIT has a stated date for termination. This date is often based on the investments held in its portfolio. For example, a portfolio that holds bonds may have a
bond ladder consisting of five-, 10- and 20-year bonds. The portfolio would be set to terminate when the 20-year bonds reach maturity. At termination, investors receive their proportionate share of the UIT's net assets.



Investment, Taxes And Measuring Performance

Related Articles
  1. Investing

    Investing In A Unit Investment Trust

    UITs offer professional portfolio selection and a definitive investment objective. Are they right for you?
  2. Investing

    What's a Unit Investment Trust?

    A unit investment trust is an unmanaged investment company that offers a fixed portfolio of stocks and bonds.
  3. Investing

    What is Terminal Value?

    The terminal value of an asset is its anticipated value on a certain date in the future.
  4. Investing

    Understanding Redemption

    In the investing world, redemption refers to cashing out the value of bonds or mutual funds.
  5. Investing

    What's a Maturity Date?

    Maturity date is the final date when any remaining principal and any unpaid interest are due on a debt.
  6. Investing

    Top 10 Investments For Baby Boomers

    Find out which investments are most likely to help you achieve your post-work income goals.
  7. Investing

    The Top 5 Long-Term Bond Funds for 2016

    Understand how long-term bond mutual funds can benefit an investor's portfolio, and learn the best long-term bond mutual funds for 2016.
  8. Investing

    How To Evaluate Bond Performance

    Learn about how investors should evaluate bond performance. See how the maturity of a bond can impact its exposure to interest rate risk.
  9. Investing

    Bond Funds Boost Income, Reduce Risk

    These funds can provide stable returns for those who depend on their investment income.
  10. Investing

    Key Strategies To Avoid Negative Bond Returns

    It is difficult to make money in bonds in a rising rate environment, but there are ways to avoid losses.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center