Bond Unit Investment Trusts
Bond unit investment trusts or bond UITs are one of the two types of UITs holding bonds in their portfolio. They invest in government and corporate bonds and shares are made available to the investors. The shares, termed units, are fixed in number and represent a small fixed portion of a large diversified portfolio. To know more, read 'Unit Investment Trusts or UITs'.
Different bond unit investment trusts have different portfolio combinations. Some invest in government bonds, some in corporate bonds and others in both. Some trusts invest their money in domestic bonds; others also invest in foreign bonds. Some invest more in tax-exempt bonds and others in taxable bonds. Thus the risk and return differs considerably and investors can choose whichever suits their goals.
Bond UITs have a fixed portfolio and a fixed maturity date ranging from just some months to over 25 years. The maturity date usually corresponds to the maturity date of the bonds invested. Payments are made monthly, quarterly or semi-annually. The principal is paid off to the investors as the bonds mature. Investors can also sell their units in secondary markets at market price prior to the bond UIT maturity date.
Bond UITs are good long-term investment options. The advantages include fixed and predictable income, some tax advantages, highly diversified investment, low minimum investment, no maintenance fees, etc. The downsides include: they are not suitable for short-term investments, no outperformance, and not suitable for investing the urgent money.
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Different bond unit investment trusts have different portfolio combinations. Some invest in government bonds, some in corporate bonds and others in both. Some trusts invest their money in domestic bonds; others also invest in foreign bonds. Some invest more in tax-exempt bonds and others in taxable bonds. Thus the risk and return differs considerably and investors can choose whichever suits their goals.
Bond UITs have a fixed portfolio and a fixed maturity date ranging from just some months to over 25 years. The maturity date usually corresponds to the maturity date of the bonds invested. Payments are made monthly, quarterly or semi-annually. The principal is paid off to the investors as the bonds mature. Investors can also sell their units in secondary markets at market price prior to the bond UIT maturity date.
Bond UITs are good long-term investment options. The advantages include fixed and predictable income, some tax advantages, highly diversified investment, low minimum investment, no maintenance fees, etc. The downsides include: they are not suitable for short-term investments, no outperformance, and not suitable for investing the urgent money.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
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