June 15, 2010
UIT stands for Unit Investment Trust. A UIT is a packaged investment offering that purchases stocks, bonds or other securities in order to achieve a specific investment objective. The objective might be to achieve tax-free investment income (i.e.-municipal bonds), to invest in companies in a certain area of the world (i.e.-China), to achieve exposure to a certain asset class (i.e.-real estate investment trusts), etc.
Instead of purchasing "shares" you purchase "units" of a UIT. UITs trade on the stock market and are considered a "liquid" investment.
Each trust has a termination date. Typical lengths include 18 and 24 month trusts. You do not have to hold a UIT until its maturity date. If you do you have the choice of receiving cash for the final value of the UIT, rolling it into a new UIT offering at a reduced commission, or in many cases of retaining the individual investments that were part of the trust.
For investors looking for a low cost, liquid investment that meets a specific objective, Unit Investment Trusts may be a suitable answer. Your Financial Advisor can help you determine if UITs have a place in your investment portfolio.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).