As volatility increases, unit investment trusts ("UITs") may offer some benefits. As described in more detail below, a UIT is a pooled investment vehicle that invests in a fixed portfolio of securities for a specified period of time. The UIT is a registered investment company under the Investment Company Act of 1940 (the "1940 Act") and has characteristics generally associated with both mutual funds and closed-end funds. A UIT issues a fixed number of redeemable securities to the public, each of which represents an undivided ownership interest in a unit of the security held by the UIT. Nearly all UITs are organized as trusts under state law, either as single trusts or series trusts, with each series constituting a different portfolio. A trust indenture governs the trust and all UIT activities, including the roles and responsibilities of the trustee, sponsor and evaluator.
According to statistics published by the Investment Company Institute, there were 115 new trusts issuing shares in December 2018. Of the 115 new trusts, 108 were equity trusts, three were taxable bond trusts and four were tax-free bond trusts. UITs had total deposits of $3.24 billion in December 2018, an increase from $3.23 billion in November 2018.
Visit us at mayerbrown.com
Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
© Copyright 2019. The Mayer Brown Practices. All rights reserved.
This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.
