SLC Management and its affiliated investment managers will offer their alternative investment strategies to the U.S. high net worth market.
Helping investors meet their current cash flow and future capital appreciation goals.
Unlimited access to our bond offerings and dedicated, personal support
Customized portfolios selected and managed by professional managers
Partnering with select institutional managers
Expert advice, ongoing trade support, and transparent pricing
An emphasis on solid investment disciplines and specific asset classes
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Financial Industry Insights from Advisors Asset Management
On August 09, 2012
How a Unit Investment Trust (UIT) is Created
In my travels, whether it is educational or speaking in front of a group of advisors, I often find myself going back to the beginning, explaining how a Unit Investment Trust (UIT) is created.
Generally speaking, each UIT is designed to meet a stated investment objective such as growth or income. The underlying securities that make up the UIT are professionally selected by either the UIT sponsor of an outside portfolio consultant. We then select the term of the portfolio based on the investment objective. For our equity UITs that could be 15 months or two years. For our fixed income UITs it could be five years to 30 years. Once the securities are selected they are held until the UIT terminates and the proceeds are distributed to the investors.
UIT investors generally pay an up-front sales charge at the time of the initial purchase and a deferred sales charge taken out of net asset value (NAV: The value of a UIT’s assets less its liabilities divided by current units outstanding) over a certain period of time. For fixed income UITs the sales charge is all upfront. The offering price, which is the price paid to purchase units of the UIT, reflects the current net asset value (NAV) plus the upfront sales charge. Sales charge discounts may be available for large purchases or swapping from one UIT to another.
While each UIT has a fixed term, investors may redeem their units on any business day prior to the termination date at NAV less any remaining sales charge. Although UITs have daily liquidity at the close of any business day, as the market fluctuates, units may be worth more or less than the original price paid.
Understanding your investment is a great start on the road to investing. At Advisors Asset Management we take great care in making sure that you do.
This commentary is for informational purposes only. All investments are subject to risk and past performance is no guarantee of future results. Please see the Disclosures webpage for additional risk information at www.aamlive.com/blog/about/disclosures. For additional commentary or financial resources, please visit www.aamlive.com
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