Equity Unit Investment Trust (EUIT)
What Is an Equity Unit Investment Trust (EUIT)?
An equity unit investment trust (EUIT) is a closed-end, publicly offered pooled trust fund managed by an investment company. Specifically, an EUIT will just invest in the stocks of publicly traded corporations.
Understanding Equity Unit Investment Trusts
A unit investment trust (UIT) is a U.S. investment company that buys and holds a portfolio of stocks, bonds or different securities. UITs share a few similitudes with two different types of investment companies: open-ended mutual funds and closed-end funds. All are collective investments in which a large pool of investors consolidate their assets and entrust them to a professional portfolio manager. Units in the trust are sold to investors, or "unitholders."
Equity unit investment trusts are managed by investment companies and can be offered alongside open-end mutual funds, closed-end mutual funds and exchange-traded funds (ETFs). Equity unit investment trusts will zero in their portfolios on stock investments. While an ETF is an open-ended investment, an EUIT is a closed-ended investment.
EUIT versus Equity Funds
While equity unit investment trusts can be managed to comparative strategies as other common funds in the market, their designs are altogether unique. Their management is regulated by the Investment Company Act of 1940. Equity securities in a unit investment trust are bought and held for the life of the trust. By then they can either be liquidated at market value or turned over into a fresher, current form of the trust.
Equity unit investment trusts have numerous unique differences when compared to mutual funds. Equity unit investments trusts will issue a predetermined number of shares during a scheduled offering period. The products have a definitive duration. Hence, investors who buy the product will receive a distribution at the product's net asset value on the termination date. The product is liquidated at its net asset value. Frequently unit holders will receive special options to reinvest their capital in the product's next emphasis, which normally is issued promptly following a termination date.
Investing in Equity Unit Investment Trusts
Equity unit investment trusts are bought and sold from the responsible investment company. They may likewise be accessible through some brokerage platforms. Equity unit investment trusts are diversified portfolios and they can disperse dividends and capital gains.
There are different types of equity unit investment trust products accessible, permitting investors to pick an investment that closely matches their own risk tolerance and investment objectives.
Features
- While it invests pooled money, similar to an equity ETF, an EUIT contrasts in that the fund is closed-ended, implying that the EUIT stops taking new money after a certain date.
- An equity unit investment trust (EUIT) is a type of closed-end investment fund that invests in the stocks of public companies.
- Closed-end funds frequently offer higher returns or better income streams than their open-end fund partners.
