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U.I.Ts - - -Your Experiences

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Aug 3, 2006 8:44 pm

What are your feelings about Unit Investment Trusts?  What has been your experience with them after the sale.  Are there any companies you like more than others?

Seems like the customers I have who like to hold individual stocks are very receptive to U.I.Ts.

Aug 3, 2006 10:20 pm

I’ve only used UIT subaccounts and have been very pleased with the performance.  I like the philosophy, but outside of an annuity…, I don’t see how they can be very tax efficient.

Aug 4, 2006 12:40 am

Take the screens they are doing to get the portfolios, run them
yourself on a more frequent basis than annually, and charge 1.5%. 
You can control the taxes better, add value, its cheaper for the
client, and its easy.  Just an idea.

Aug 4, 2006 1:41 am

I stay away from UIT's.  I used to do the Dogs of the Dow when I started, but quickly became frustrated at the relative performance, tax complications, etc.  Also these tend to scream out "packaged product" much more than even a mutual fund.

However, it thrills me to see a UIT on a statement from a competing firm when I'm trying to bring in a new client. In particular, fixed income UIT's which generally can be torn to shreds (cost, performance, lack of flexibility).   

Aug 4, 2006 1:10 pm

Good Feedback.

The U.I.T.s I use are in IRAs

Clients love the flexibility, relatively low sales charge, and ability to move out when the trusts terminate.

Aug 9, 2006 4:33 pm

Is noone out there doing these?  I would like to hear some feedback–good or bad-- regarding your experience.

Aug 11, 2006 2:03 am

I use fixed income UITs a little. 10-15 individual bonds. Corporates and Munis are the only ones I have seen.

What I like about them is a return of principal (minus the sales fee) that you will not get in a bond fund. As the underlying bonds mature, principal is returned to the client. There are infinite flavors (laddered, insured, long, intermediate, short). I really like them for smaller rollovers (100k plus) because you get diversification with return of principal. Most of these pay monthly, which my clients like.

I like them quite a bit.

Equity UITs are also pretty cool. Clients have the ability to take an in-kind distribution of the underlying stocks at any time.

I don't have anything against them, I just don't use them much other than the fixed income UITs.

Hope that helps.


Aug 11, 2006 2:04 am

and I use Van Kampen. I like em.

Aug 11, 2006 12:07 pm

I use UITs frequently.  When you buy a mutual fund that’s not an index fund, there is always a fair amount of money in cash.  Additionally, you never know exactly what you own or what you’ll own tomorrow.  With a UIT, both of these problems are solved.  As an added bonus, my UIT client’s have had results that have blown away any mutual fund.

Aug 11, 2006 5:01 pm

Agreed on both points.  So, why are people not using them?  They are a great way to annuitize your business.  I am using them quite a bit lately in IRAs