Unit investment trust


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Unit investment trust

Money invested in a portfolio whose composition is fixed for the life of the fund. Shares in a unit trust are called redeemable trust certificates, and they are sold at a premium to net asset value.

Unit Investment Trust

An investment company that offers an unmanaged portfolio of stocks and/or bonds, packaging the portfolio as shares that are redeemable from the trust after a certain period of time. Unit investment trusts are designed to give shareholders income from dividends and/or coupons. See also: Mutual fund.

unit investment trust

An unmanaged portfolio of investments put together by an investment adviser and sold in units to investors by brokers. Units of a trust usually sell for $1,000 including a sales commission of approximately 4% at the time of the initial offering. Sponsoring brokers usually maintain a secondary market for the units, the value of which depends on the value of the securities held by the trust. Because of the initial sales charge, unit investment trusts are usually not attractive for short-term trading. Also called fixed trust.

Unit investment trust (UIT).

A UIT may be a fixed portfolio of bonds with specific maturity dates, a portfolio of income-producing stocks, or a portfolio of all the securities included in a particular index.

Examples of the latter include the DIAMONDs Trust (DIA), which mirrors the composition of the Dow Jones Industrial Average (DJIA), and Standard & Poor's Depositary Receipts (SPDR), which mirrors the Standard & Poor's 500 Index (S&P 500). Index UITs are also described as exchange traded funds (ETFs).

UITs resemble mutual funds in the sense that they offer the opportunity to diversify your portfolio without having to purchase a number of separate securities. You buy units, rather than shares, of the trust, usually through a broker.

However, UITs trade more like stocks than mutual funds in the sense that you sell in the secondary market rather than redeeming your holding by selling your units back to the issuing fund.

Further, the price of a UIT fluctuates constantly throughout the trading day, just as the price of an individual stock does, rather than being repriced only once a day, after the close of trading. As a result, some UITs, though not index-based UITs such as DIAMONDS or SPDRs, trade at prices higher or lower than their net asset value (NAV).

One additional difference is that many UITs have maturity dates, when the trust expires, while mutual funds do not. A fund may be closed for other reasons, but not because of a predetermined expiration date.

References in periodicals archive ?
has teamed with International Strategy and Investment Inc., the money management arm of International Strategy and Investment Group LLC, to launch a unit investment trust (UIT), the American Renaissance Portfolio, Series 2013-1.
Banks' unit investment trust funds or UITF totaled P625.94 billion, 21.40 percent less than what was reported last year of P796.42 billion.
MANILA, Philippines - The Unit Investment Trust Fund (UITF) portfolio of Security Bank Corp.
Four Gucci watch, Fila tennis shoes and Tommy Hilfiger shirt may get results on the dance floor - and off, if you invest in a new unit investment trust (UIT) that reflects the African American consumer.
Heeding a petition from fund managers, the Securities and Exchange Commission will issue a new ruling that allows unit investment trust funds (UITFs) and similar trust entities to participate in securities deals that are open only to selected institutional investors.
We have a retirement savings program in the form of the Personal Equity and Retirement Account; we have unit investment trust funds, a type of pooled funds managed by banks; mutual funds, another type of pooled fund that is managed by investment companies; and variable unit linked funds, which are administered by insurance companies.
The investment product is structured as a Unit Investment Trust Fund (UITF), making participation and redemption of the investment uncomplicated.
Top Manulife regional fund managers were in town to talk about two new unit investment trust funds (UITFs) that offer diversification to a basket of assets across the Asia-Pacific.
The thrift banking sector reported a slightly higher assets under management (AUM) portfolio of P32.05 billion as of the end of the first quarter but reported a significant increase in unit investment trust fund (UITF) holdings.
Examples of these are mutual funds, unit investment trust funds, single pay variable unit-linked insurance and investment management accounts with trust departments of banks.
Of these managed assets, P595.448 billion are unit investment trust funds or UITF, 39.47 percent higher from the same period in 2013 of P426.925 billion.
Security Bank Corp has said that it has launched a new dollar-denominated unit investment trust fund (UITF).

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