What is a unit investment trust (UIT)? Typically, what combinations of securities might be purchased in a UIT?
Unit investment trusts are a diversified portfolio of professionally selected securities that are sold by brokerage firms to investors in units. A unit typically costs $1,000. UITs usually represent only one category of investment assets such as a group of bonds or a group of stocks. Municipal bonds or Government National Mortgage Association (GNMA) bonds are often packaged in a UIT. Similarly selected stocks, such as “The Dow Ten” made up of the 10 highest yielding stocks in the Dow Jones Industrial Average (DJIA), may be packaged into a UIT. Portfolios that might be worth $100,000 or more are available to the investor for a $1,000 unit cost. UITs give the small investor an opportunity to own securities that would otherwise be far beyond their investment capacity. Unlike mutual funds, UITs are not “professionally managed,” but are professionally selected portfolios that do not change. Given the sales commission charged, units are most cost effective if held until the trust is dissolve
Related Questions
- Why did I receive a cost-basis allocation factor for unit investment trust (UIT) securities held in my brokerage account?
- Why did I receive a cost basis allocation factor for Unit Investment Trust (UIT) securities held in my brokerage account?
- What is a unit investment trust (UIT)? Typically, what combinations of securities might be purchased in a UIT?
