Unlike a mutual fund, a UIT is created for a specific length of time and is a fixed portfolio: its securities will not be sold or new ones bought except in certain limited situations (for instance, when a company is filing for bankruptcy or the sale is required because of a merger).
[4] Stock trusts are generally designed to provide capital appreciation and/or dividend income.
Bond trusts are generally appropriate for clients seeking current income and stability of principal.
The trustee keeps the securities, maintains unitholder records, and performs all accounting and tax reporting for the portfolio.
Other sponsors include Incapital, SmartTrust, Invesco Unit Trusts, Millington Securities, Advisors Asset Management[5] and Guggenheim Funds.
Most large brokerage firms (such as Merrill Lynch and LPL Financial) sell UITs created by these sponsors.
A UIT avoids such potential tax consequence by assembling an entirely new "investment" for each individual investor.