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Unit Investment Trust

A Unit Investment Trust (UIT) is a specialized investment company that purchases a fixed portfolio of stocks, bonds or other securities.

Investors purchased units of the trust, which represent an undivided ownership in the entire portfolio. UITs have a stated maturity that ranges from one year, two years, to as many as five years depending on the type of holdings that are in the portfolio. These maturities also contribute to a distribution of income which investors will receive monthly. These trusts are designed to fill a variety of investment needs and risk tolerance levels.

UITs fall primarily into two categories, Equity and Fixed Income:

Equity Unit Investment Trusts (Equity UITs)
Equity UITs are portfolios that consist of domestic and international stocks. Their security selections are based on the stated investment objectives of the trusts. These type of portfolios posses various levels of risk tolerance ranging from conservative to aggressive based on an individual’s investment preferences from Index Trusts, Sector Trusts and Strategy Trusts.

Fixed Income Investment Trusts (Fixed Income UITs)
Fixed Income UITs includes portfolios that consists of corporate bonds, preferred securities, state and national municipal bonds, government securities, or mortgage-based securities. Because these bonds are held in a trust, investors know exactly what they are buying and their stated maturity date, quality ratings and call dates for each of the bonds.

The advantages of owning UITs include:

  • Known Portfolio - The securities held in the portfolios remain fixed, giving investors the comfort of knowing what they own.

  • Diversification - By buying a variety of stocks or bonds, an UIT diversifies its holdings which helps reduce risk by offsetting losses from other securities with gains in others.

  • Low Expenses - Traditionally, UITs have offered significantly lower expenses in terms of investment strategies. Ideal for the average investor who would find it expensive and difficult to construct a portfolio as diversified as that of a UIT.

  • Daily Liquidity - UITs may be redeemed on any business day at the redemption price, which may be more or less than your original purchase price.

  • Fully Invested- UITs have limited cash positions meaning more of your money is working in the market.

  • Professional Portfolio Selection & Supervision - There is a team of experienced, knowledgeable professionals who know and understand the markets to research and select appropriate securities for each portfolio. Once a portfolio is chosen, the holdings of the portfolio are supervised, eliminating the need to oversee each security on your own.

To learn more about our Unit Investment Trusts (UITs) and how they may differ from your current investment strategies, please contact your local BB&T Scott & Stringfellow office today.

You should carefully consider the trust’s investment objectives, risk, charges and expenses before investing. Contact BB&T Scott & Stringfellow at (800) 552-7757 or (804) 643-1811 to request additional information about UITS.