Unit investment trusts offer a simple, convenient and affordable way to develop a well-diversified investment portfolio of stocks and/or bonds without having to select and manage the individual investments yourself.
The investments within a unit trust are fixed for a predetermined time, which means the investments do not change unless a company is bought or merged with another company or a company’s financial condition becomes irreparable. This means you always know what you own.
Buying Trust Units
Owning a unit of the trust means you own a proportional share of all the investments within the portfolio. It also means that, for a fraction of the cost, you can have diversified investments (including stocks and/or bonds) that may normally require $100,000 or more to purchase on their own.
Unit investment trusts may be suitable for most investors, whether they’re conservative, more aggressive or somewhere in between. That’s because unit trusts provide diversification of quality stocks in a convenient and affordable package without losing the liquidity many investors need.
Unit investment trusts are not actively managed. Securities in the trust will not be sold to take advantage of market conditions. The trust may continue to hold securities even though their market value and dividend yields may have changed.