Compare unit investment trusts vs mutual funds?

17th Nov 2009 by Joseph Pousada

Mutual funds are open end investment companies. This means if an investor wants to invest the investment company will issue new shares to the investor based on the next pricing of the fund. There are various types of mutual fund investment companies, from some that focus on Fixed Income to some that focus on Small Cap Investments. There are also different investment styles from Growth Investing to Value Investing to Socially Responsible Investing. There are load funds in which there would be a sales charge and those that do not called no-load funds.

Unit Investment Trusts are also investment companies, but they issue a fixed number of shares and will invest in a fixed portfolio in that it is not managed but the assets remain as is (not taking into account mergers and other factors) for a specified period of time. The types of underlying investment will also vary from one Unit Investment Trust to another. It is important to review any investment that are considering with your financial advisor to see if the investment is suitable and how it would fit into your overall portfolio strategy.


Reference:
http://www.finra.org/Investors/SmartInvesting/ChoosingInvestments/MutualFunds/
http://en.wikipedia.org/wiki/Unit_Investment_Trust

This answer is the subjective opinion of the writer and not of FinancialAdvisory.com