Financial Help: Unit Investment Trust
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A unit investment trust is when an investment company or financial institution acquires a fixed portfolio of different securities and then sells these shares to other individuals. This portfolio could have come from anywhere, possibly a portfolio that the company had set up well in advance, possibly from other means.
Unit Investment Trust or a Mutual Fund?
As you may be thinking, what is the difference between a unit investment trust and a mutual fund? They both seem to be doing the exact same thing. There is one major difference that needs to be pointed out. A unit investment trust is a portfolio that is not managed at all.
Because these investments are not managed the gains and interest from the trust are passed directly on to the shareholders. Sometimes this income can come from securities that are tax-free. In this instance, the payments to the shareholders will be tax-free as well.
These types of trusts are considered to be extremely low risk and low return investments. Because they are so low of a risk the gain on investments move very slowly. One reason why people sometimes enjoy these types of investments is because there is little to no operating expenses with them.
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Posted on: Saturday, June 21, 2008 at 2:32 pm 
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