[quote=B24][quote=snaggletooth][quote=vbrainy]UIT holders can be very severly impacted in down markets.  Unlike a mutual fund, when it is time to roll over, you only roll over the amount of money and usually buy shares at $10 a pop.

So, if you owned 200 shares and paid $2000 the market declines 10% you now have $1800 to rollover.  not 200 shares.  watch out there grasshopper.[/quote]   Your post doesn't make sense.   If you roll the entire investment over, it doesn't matter how many shares you own.  Your percentage gain after rolling the money is the same for 180 shares at $10/share as it is for 200 shares at $9/share.  [/quote]   Actually, vbrainy is right if he is referring to bond UIT's.  Let's say you buy a UIT (for simplicity sake) it has 10 shares at $10/ea., for a $100 total.  It kicks off a 5.5% coupon.  Let's ignore commissions right now, as it is unimportant to this argument.  If you sell that UIT when the internal bond prices are at $9.00, you will get $90 back, and can now only buy $90 worth of bonds.  But that original $90 (you bought for $100) was still kicking off $5.50/year.  If you re-invest the $90, you now need a yield of 6.1% to get the same $5.50.  You must also pay another commission.  Now, it may be that the prices dropped because rates have risen, and you MAY be able to reinvest at a higher coupon.  But after commissions, that may not happen. So I don't think Vbrainy is way off here.[/quote]   Right, but the theory is that if you roll it over when prices are down, yields will be up, and vice versa.    If you're talking about individual bond UIT's, you hold them to maturity and you get $100 back.  Any of the individual bond UIT's I've looked at are 5 year max maturities with bonds coming due in different years.  I haven't used them though.

The benefits of a UIT vs. say a Bond Fund or ETF is simply the definite nature of the holdings. An ETF or Bond Fund can and often do change their holdings so the client cannot be certain of a particular income stream. With a UIT they can be certain of that stream so that you and the client can plan for that accordingly. An ETF is cheaper if bought outside of a Wrap Account but inside of the account it may not be.

  Conversely, a UIT is NOT better than a properly diversified portfolio of individual bonds, however to get the same diversification the client would need much more money as most UIT's I review (on the fixed income side) have at least 25 different individual bonds.   So the pro's are monthly income stream that is predictable, diversified portfolio with lower capital requirements and professional selection criteria (not professional management).   The Con's are that a well captialized investor can do just as well or better if they have a higher $$ figure to invest. In truth, if you want to keep your total portfolio holdings in proper allocation models, then the investor would have to be very well capitalized given that you wouldn't want any one of the 30 or so bonds to be more than 7-10% of their individual holdings.   Equity UIT's are a bit different as they can be replicated at a lower cost than Fixed income UIT's and usually have a 15 month time frame or there about vs. a much longer time frame than Fixed Income UIT's. I believe they are more subsitutes for C share MF holders who like to turn their investments more vs. the longer term A share investor.

[quote=snaggletooth][quote=B24][quote=snaggletooth][quote=vbrainy]UIT holders can be very severly impacted in down markets.  Unlike a mutual fund, when it is time to roll over, you only roll over the amount of money and usually buy shares at $10 a pop.

So, if you owned 200 shares and paid $2000 the market declines 10% you now have $1800 to rollover.  not 200 shares.  watch out there grasshopper.[/quote]   Your post doesn't make sense.   If you roll the entire investment over, it doesn't matter how many shares you own.  Your percentage gain after rolling the money is the same for 180 shares at $10/share as it is for 200 shares at $9/share.  [/quote]   Actually, vbrainy is right if he is referring to bond UIT's.  Let's say you buy a UIT (for simplicity sake) it has 10 shares at $10/ea., for a $100 total.  It kicks off a 5.5% coupon.  Let's ignore commissions right now, as it is unimportant to this argument.  If you sell that UIT when the internal bond prices are at $9.00, you will get $90 back, and can now only buy $90 worth of bonds.  But that original $90 (you bought for $100) was still kicking off $5.50/year.  If you re-invest the $90, you now need a yield of 6.1% to get the same $5.50.  You must also pay another commission.  Now, it may be that the prices dropped because rates have risen, and you MAY be able to reinvest at a higher coupon.  But after commissions, that may not happen. So I don't think Vbrainy is way off here.[/quote]   Right, but the theory is that if you roll it over when prices are down, yields will be up, and vice versa.    If you're talking about individual bond UIT's, you hold them to maturity and you get $100 back.  Any of the individual bond UIT's I've looked at are 5 year max maturities with bonds coming due in different years.  I haven't used them though.[/quote]   Thank you.  Finally someone who can do basic math.