My advisor suggests me putting much of my investments into a UIT. I trust him but I’d like to get an outside opinion of the pros/cons of UITs.
Depends on what your investment goals are and your level of risk tolerance.
There are some tax advantages to investing in UIT’s versus mutual funds, but you can get the same tax advantages from investing in specific stocks or bonds. The main disadvantage of UIT’s, especially stock based ones, is that the UIT’s are set for a specific time period or maturity. Once it’s closed and you are invested, if the stocks within the portfolio begin to underperform, there are limitations on the Trusts’ ability to get out.
Thanks Omar. What benefits do I get from having the time lock?