Unit investment trusts (UIT)

Unit investment trusts are as much a part of the financial landscape as individual stocks and/or bonds. They originated many years ago in Scotland and were adopted in this country in 1961, principally to give average Americans a convenient way to invest in tax-exempt securities.  Since then, the UIT product line and popularity has grown exponentially and now include Equities, Closed End securites and Taxable Fixed Income products including Corporate Bonds, Preferreds and GNMA's.  The portfolios are designed to fill a variety of investment needs and risk tolerance levels and may be appropriate for a variety of reasons such as tax control, liquidity and diversification.

The "Buy and Hold" philosophy

A UIT enables investors to own a "basket" of securities with one single purchase and adhere to a "Buy and Hold" philosophy rather than trying to select individual securities that meet their objectives. This philosophy maintains that it is far better to purchase a well-chosen portfolio of stocks and to hold them for a predetermined period of time, rather than "playing the market." This helps eliminate emotional investing and the temptation to buy and sell for various reasons that an investor cannot control: the volatility of the stock market, interest rates, inflation and the overall economy, political elections, or the latest investment fad. This philosophy requires an investor to have patience and discipline while focusing on the future prospects of the companies rather than looking only for shortterm appreciation. This approach has the potential to reward investors over the long term while allowing them to be less concerned with the day-to-day fluctuations of the market. Of course, should your needs ever change, UIT equity portfolios can be liquidated on a daily basis.