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Chapter 11. Mutual Funds > Unit Investment Trusts

Unit Investment Trusts

A unit investment trust (UIT) is similar to a closed-ended mutual fund in that it is passively managed and has specific time horizons after which the assets are sold. At this time, the UIT pays out any final benefits to shareholders. UITs are goal specific, meaning that you can find UITs that are designed for capital appreciation or for income. UITs are low in cost because the portfolio is not actively traded. This is a concept called passive management wherein the manager doesn't actively buy or sell during the term of the UIT. You'll read more about passive management later in this chapter. These products are typically sold through major banks, wirehouses such as Morgan Stanley, and independent financial planning firms.


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