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What Are Unit Investment Trusts?



Unit investment trusts (UITs) can be thought of as a hybrid investment; sharing some of the qualities of mutual funds and some of the qualities of closed-end funds.

Unit investment trusts, like closed-end funds, issue a set number of shares. These shares are called “units.” Unlike closed-end funds (and open-end funds), the securities within a unit investment trust portfolio cannot be actively-traded.

A unit investment trust portfolio is established at the inception date and holds the original securities until termination of the unit investment trust. At the termination date the UIT shareholders either receive the proceeds of their investment or they can reinvest in the next UIT series (if available).

Read More: UITs: The Neglected Cousin of Mutual Funds

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