Unit investment trusts (UITs) are an investment option provided by financial institutions, such as mutual funds, exchange-traded funds, and other entities. UITs are managed by a trust supervisor, such as the First Trust unit investment trusts (FTA). FTA is the supervisor of the First Trust unit investment trusts, and is responsible for the management of mutual fund shares and exchange-traded fund creation units.
UITs are a type of collective investment scheme where investors are pooled together to purchase a portfolio of stocks, bonds, and other securities. The trust then issues stock securities to investors, and the trust supervisor is responsible for managing the portfolio. The trust supervisor is also responsible for ensuring that all investors receive a fair return on their investment.
One example of a UIT is the PowerShares QQQ Trust, Series 1, which is a unit investment trust that issues securities called Nasdaq-100 Index Tracking stock. This particular trust is a unit investment trust, and Mrust Series 1 is the name of the trust that issues stock securities to investors.
UITs can provide investors with a number of benefits, including access to a diversified portfolio of securities, a lower cost of entry, and the ability to purchase a large number of stocks or bonds without having to make a large initial investment. UITs are also less risky than other investment options, as they are managed by a trust supervisor.
In addition to providing investors with access to a diversified portfolio of securities, UITs can also be used to invest in specific projects or companies. For example, Artis Real Estate investment Trust Unit (TSE:AX.UN) recently announced that it had been given an average recommendation of 'Hold' by analysts. This type of UIT allows investors to invest in a specific project or company, thereby providing them with the potential to earn higher returns than other types of investment.
Another benefit of UITs is that they can be used to invest in specific areas such as opportunity zones. For example, the project-specific opportunity zone fund will raise capital to invest in low-income communities. A portion of the units will be allocated to residents with an annual median family income, the remainder of the available units will be open to the public. This type of UIT provides investors with the opportunity to invest in specific areas, while also providing them with access to a diversified portfolio of securities.
In addition to providing investors with access to a diversified portfolio of securities, UITs can also be used to invest in specific funds. For example, Manulife investment Management and Trust Corp. recently launched two new unit investment trust funds in the Philippines. It said Manulife Asia Short Duration Bond Fund and Manulife Asia Equity Fund are designed to provide investors with access to specific funds that are tailored to meet their investment needs.
FTA has collective assets under management or supervision of approximately $190 billion as of December 31, 2022 through unit investment trusts, complex trusts, common trust funds, private trust companies, and other fiduciary and investment management services. The trust supervisor is also responsible for enforcing laws and rules designed to protect crowdfunding investors; those who were charged excessive fees for unit investment trust rollovers; and those who had their investment placed in unsuitable investment.
