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fund, on the other hand, taxes the individual based on the entire previous tax year, regardless of the date purchased. An investor could, for example, purchase a mutual fund in
October, absorb a loss during the last quarter of the year, and still be taxed on capital gains within the fund, depending on the overall performance of the underlying securities from January 1 of the current year. A UIT avoids such potential tax consequence by assembling an entirely new "investment" for each individual investor.
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A UIT is created by a document called the Trust
Indenture. This document is drafted by the Sponsor of the fund, and names the Trustee and the Evaluator. By US law, the Sponsor and the Trustee may not be the same. The sponsor selects and assembles the securities to be included in the fund. The trustee
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From a tax perspective, UITs offer a shelter from the unrealized capital gains taxes typical inside of a mutual fund. Because individual UITs are assembled and purchased for specific periods of time, the cost basis consists of the initial purchase price of the securities held in the trust. A mutual
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A UIT may be constituted as either a regulated investment company (RIC) or a grantor trust. A RIC is a trust, corporation or partnership in which investors have common investment and voting rights but do not have direct interest in investments of the investment company or fund. A grantor trust, in
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Stock trusts are generally designed to provide capital appreciation and/or dividend income. They usually issue as many units (shares) as necessary for a set period of time before their primary offering period closes. Equity trusts have a set termination date, on which the trust liquidates and
127:
return of principal. The trust then continues paying the new monthly income amount until the next bond is redeemed. That continues until all the bonds have been liquidated out of the trust. Bond trusts are generally appropriate for clients seeking current income and stability of principal.
118:
Bond trusts issue a set number of units, and when they are all sold to investors, the trust's primary offering period is closed. Bond trusts pay monthly income, often in relatively consistent amounts, until the first bond in the trust is called or
89:, a UIT is created for a specific length of time and is a fixed portfolio: its securities will not be sold or new ones bought except in certain limited situations (for instance, when a company is filing for
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Advisors Asset
Management, Inc. (2008, June 16). Advisors Asset Management, Inc. and Fixed Income Securities Unite Under AAM Brand . Retrieved from
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keeps the securities, maintains unitholder records, and performs all accounting and tax reporting for the portfolio. The largest issuer of UITs is
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having a definite life. Unlike open-end and closed-end investment companies, a UIT has no board of directors. A UIT is registered with the
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as proceeds to the unitholders. (The unitholders may then have special options for the reinvestment of this principal.)
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or update automatically to follow an index), and they can have lifetimes of over 100 years. For example, the
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A UIT portfolio may contain one of several different types of securities. The two main types are
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123:. When this occurs, the funds from the redemption are distributed to the clients via a
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197:(ETFs) are technically classified as UITs: however, ETFs usually do not have set
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contrast, grants investors proportional ownership in the underlying securities.
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http://findarticles.com/p/articles/mi_m0EIN/is_2008_June_16/ai_n27501020/
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276:(6th ed.). Barron's Educational Series. p. 927.
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Trust is scheduled to terminate
January 21, 2118, and the
38:) is an investment product offering a fixed (unmanaged)
58:. UITs are assembled by a sponsor and sold through
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826:
539:Qualifying investor alternative investment fund
213:Trust is scheduled to terminate March 4, 2124.
270:John Downes and Jordan Elliot Goodman (2003).
425:
131:
499:Labour-sponsored venture capital corporation
811:
432:
418:
327:, §4.03; §9.06 (Matthew Bender, 2014 ed.).
273:Barron's finance & investment handbook
840:Investment companies of the United States
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181:) sell UITs created by these sponsors.
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380:: CS1 maint: archived copy as title (
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93:or the sale is required because of a
260:, §4.03 (Matthew Bender, 2014 ed.).
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325:Regulation of Investment Companies
258:Regulation of Investment Companies
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48:Securities and Exchange Commission
14:
851:
300:Concise encyclopedia of investing
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303:. Psychology Press. p. 76.
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636:Socially responsible investing
566:Split capital investment trust
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52:Investment Company Act of 1940
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524:Open-ended investment company
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782:Returns-based style analysis
545:Real estate investment trust
396:"Invesco | Performance"
223:Collective investment scheme
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717:Efficient-market hypothesis
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19:For the UK fund types, see
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556:Short-term investment fund
297:Darren W. Oglesby (2006).
145:. Other sponsors include
132:Legal status and documents
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800:
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504:Listed investment company
473:Fonds commun de placement
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163:Advisors Asset Management
30:In U.S. financial law, a
712:Arbitrage pricing theory
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54:and is classified as an
787:Traditional investments
772:Commodity pool operator
746:Noisy market hypothesis
741:Modern portfolio theory
591:Unitised insurance fund
519:Open-ended fund company
461:Common contractual fund
323:Lemke, Lins and Smith,
256:Lemke, Lins and Smith,
767:Alternative investment
681:Institutional investor
143:First Trust Portfolios
581:Unit investment trust
441:Investment management
195:exchange-traded funds
159:Millington Securities
32:unit investment trust
571:Tax transparent fund
467:Exchange-traded fund
74:(equity) trusts and
626:Manager of managers
534:Private-equity fund
362:on October 18, 2012
155:Invesco Unit Trusts
736:Martingale pricing
646:Thematic investing
611:passive management
56:investment company
16:Investment product
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600:Investment styles
310:978-0-7890-2344-5
283:978-0-7641-5554-3
201:(they are either
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835:Investment funds
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655:growth investing
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489:Investment trust
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355:. Archived from
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60:brokerage firms
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62:to investors.
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179:LPL Financial
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175:Merrill Lynch
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169:. Most large
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777:Robo-advisor
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364:. Retrieved
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751:Yield curve
664:Terminology
616:Hedge Funds
509:Mutual fund
449:Investment
233:Stockbroker
228:Mutual fund
114:Bond trusts
87:mutual fund
829:Categories
586:Unit trust
494:Hedge fund
484:Index fund
453:structures
244:References
199:portfolios
151:SmartTrust
91:bankruptcy
82:) trusts.
50:under the
44:securities
21:Unit trust
730:Convexity
173:(such as
147:Incapital
85:Unlike a
40:portfolio
808:Category
726:Duration
376:cite web
366:July 31,
217:See also
125:pro-rata
541:(QIAIF)
203:managed
121:matures
705:Theory
607:Active
547:(REIT)
307:
280:
95:merger
792:UCITS
651:Value
561:SICAV
475:(FCP)
469:(ETF)
463:(CCF)
360:(PDF)
353:(PDF)
193:Some
72:stock
66:Types
816:List
451:fund
382:link
368:2012
305:ISBN
278:ISBN
177:and
165:and
76:bond
23:and
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42:of
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Text is available under the Creative Commons Attribution-ShareAlike License. Additional terms may apply.