Unit investment trust funds can be
compared with edge and mutual funds as well. It is a possible term to apply
unit investment trust funds and get some benefits relating to mutual fund
without facing any likely difficulties. Following the factors presented below
will give a clear view on how unit investment trust funds operate.
Fixed Terms
To differentiate between unit
investment trusts and mutual fund, using a fixed term will elaborate the figure
perfectly. When talking about unit investment trusts, fixed term is associated
with their operation while mutual funds are prepared to run indefinitely. It
practically means that when the term expires, securities found in the portfolio
are marketed and refund to an investor as fund. Investors will have a stream of
dynamic flow because money cannot be left above the end of a term.
Portfolio Of Securities
A better picture to describe unit
investment trusts is when using collective investment programs. In the
operation of a unit investment trust, big investment firms are open to buying
huge securities in the likes of bonds and stocks. After the purchase of large
securities by big investment firms, they can as well market shares of the
portfolio to other investors. This mean that each investor will have a given
percentage of security found in the portfolio. In a likely manner, investors
can resell share to the investment firm to get the asset value of shares at any
point.
Fixed Portfolio
A good quality of unit investmentfunds is found in its fixed portfolio feature. It basically means that there is
never an investment manager to check on this fund on a daily basis. It goes a
long way remaining until the end of a term when a security is being bought for
the fund. Another distinguishing factor that differentiate unit investment
trust from mutual fund is the presence of buying and selling securities on a
regular basis. Mutual funds can always buy and sell securities at any point.
Unit investment trust does not require an active management because of the
funds attributed to it. This bring a clear view of unit investment trust funds.
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