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March 30, 2001/Nisan 6, 5761, Vol. 53, No.26
UITs can be great investment
LEE EISINBERG
Special to Jewish News
When you think of investments, what comes to mind? Stocks and bonds. Mutual funds. And maybe somewhere, far down the list, would be unit investment trusts (UITs). Though UITs may not be as widely recognized as other investment vehicles, they can still help you meet your financial goals.
A UIT is a fixed portfolio of stocks, bonds or other securities. If you invest in a UIT, you're actually purchasing units of the trust, so you've got an ownership stake in the entire portfolio. UITs have stated maturities, ranging from one to thirty years, depending on the holdings or the trust's objectives.
Because a UIT has a designated maturity, you may be able to use it to help meet a future-funding goal, such as college for your children. You will, however, need to be aware that UIT prices will fluctuate over time. But UITs offer other advantages as well, including professional selection, portfolio supervision, relatively low minimum investments and liquidity.
Basically, you can invest in two types of UITs: equity portfolios and fixed income portfolios.
Equity UITs
You can choose an equity UIT that's based on either a particular strategy or a specific market sector. As the name suggests, strategy portfolios follow a particular investment strategy. For example, you can find a UIT that's based on the "Dogs of the Dow" - the ten Dow Jones Industrial Average stocks that have the highest dividend yields at the beginning of a given year. (These stocks are far from "dogs" - they're actually high-quality companies whose prices are temporarily down, resulting in higher yields).
Sector UITs, on the other hand, invest in companies that are involved in a specific industry. You can find sector portfolios that invest in technology, financial services, health care, energy or pharmaceuticals, to name a few. These sector-based UITs look for market trends in specific areas and try to spot those companies that are well positioned to benefit from these trends.
Fixed Income UITs
Fixed income UITs may contain corporate and municipal bonds, Treasury securities or mortgage-backed securities. When you buy shares in a fixed income UIT, you can choose either monthly or semi-annual distributions, so your UIT can help you meet your cash flow needs.
UITs: Worth Exploring
UITs may not be the best-known investments-but they're definitely worth knowing about. Consider looking into them soon.
Lee Eisinberg is an investment executive at Dain Rauscher in Phoenix. The opinions expressed are Eisinberg's and do not necessarily reflect those of the firm. Dain Rauscher is a member of the NYSE and SIPC. Eisinberg may be reached at 602-508-7863 or toll free at 1-888-595-4166.
Unit Investment Trusts are sold by prospectus only. The prospectus, which contains complete information about fees and expenses, can be obtained by contacting your Investment Executive. Please read it carefully before investing or sending money.
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