Q: I’m interested in obtaining a unit investment trust. Which companies offer them?
–Veronica Williams, New York
A: First, let me explain what a unit investment trust is. It’s a cousin to the mutual fund, but you don’t have to worry about asset turnover. In short, unit investment trusts (UIT) are securities that are bundled together and then sold in pieces to investors, generally for $1,000 or less. Since they are unmanaged pools, the securities are unchanged for the life of the trust, usually one to five years. During that time, values are set on a daily basis and investors can sell their units, if they wish. When the trust matures, you can “roll over” your investment into a new trust. You can purchase both fixed-income and equity trusts, which have been among the most popular during this 10-year bull market.
There are a number of Websites that can help you identify unit investment trusts domestically and abroad. Unit Investment Trust Net (www.uitnet.com) provides information on municipal bond unit trusts, and TrustNet (www.trustnet.co.uk) will furnish you with comparative data on 600 U.K. investment trusts, closed-end offshore funds and closed-end U.S. funds.
For additional information on UITs, we sugggest you read the article, “Putting all your eggs in one sturdy basket,” in be’s July Moneywise section and “The ABC’s of UITs” on Moneywise Online.