Unit Trusts

IN ADDITION TO MUTUAL funds, closed-end funds and ETFs, you might hear about a fourth type of fund: unit investment trusts, or UITs. These are unmanaged baskets of securities sold by brokers during a onetime public offering period, with investors paying perhaps a 4% sales commission. Each UIT has a maturity date, though some sponsors of UITs will redeem the funds from investors before maturity.

Are UITs a good investment? Investors don’t appear wildly excited about them. According to the Investment Company Institute, there were less than 4,000 UITs outstanding as of year-end 2023, with combined assets of $77 billion, down from $101.1 billion recorded in 2014. UITs that hold stocks accounted for $72.1 billion of the total. By contrast, regular mutual funds managed $25.5 trillion as of year-end 2023.

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