Even the beginning and end dates for the historical record are selected to maximize the historical gains.Because of these disadvantages, UITs have declined, especially since index funds and exchange-traded funds can accomplish the same investment objectives, but with lower expenses. According to their promoters, there are five simple steps to building a huge fortune in a couple of days: Well, this is how is supposed to work anyhow. It doesn't, for obviously as you can see above there are several critical flaws -- probably the most important being that nobody is going to loan you from 0 million to 0 million unless you're Bill Gates or some lesser billionaire, or a publicly-traded corporation with lots of assets to seize if you default. Just walk into your local major bank and tell them you would like to take out a 0 million loan; and don't mind that jacket they give you with the long sleeves, they're just being courteous. What self-liquidating loans are (these are also sometimes called "Arbitrage Loans") is best explained by how they purportedly work.A typical UIT charges 3 fees: However, annual UIT expenses are low, often 0.25% to 0.3% of assets, since a UIT does not trade securities after it is formed, so there are few, if any, transaction costs.As with mutual funds, sales charges can be less if the investor buys at least ,000 of units.
The trust indenture is the legal agreement specifying the terms of the trust and the obligations of the trust sponsor, who creates the trust, and the investors of the trust, who are the trust beneficiaries.There are several main types of UITs: equity trusts and bond trusts, which can be further subdivided into taxable trusts, consisting of corporate bonds and tax-exempt trusts consisting of municipal bonds.Equity trusts can also be further subdivided into domestic and international or global trusts, holding such high-yielding assets as dividend-paying common stocks, preferred stocks, real estate investment trusts, or master limited partnerships.Other disadvantages may be specific to the type of securities held by the trust.For example, most corporate bonds have call provisions, so income from a UIT that holds corporate bonds may decline over its term as some of its bonds are called by the issuer.