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Understanding the Essentials of ETFs and UITs

by AOG Wealth Management

Understanding investments is an important part of choosing the right investments for your financial goals. Exchanged Traded Funds and Unit Investment Trusts are two options that can be the right investments for your portfolio. AOG Wealth Management examines both ETFs and UITs to help you understand what makes them unique and their benefits.

Understanding the Essentials of ETFs and UITs

Exchanged Traded Funds (ETFs)
Initiated in the late 1980s as an alternative to mutual funds, ETFs are marketable securities that track indices, commodities, and bonds. These differed from mutual funds in that these trade like common stock. ETFs are attractive to those seeking wealth management investments in Reston and the surrounding areas because these have higher liquidity on a daily basis and lower fees. All these make ETFs particularly attractive to individual investors. Advantages include:

  • Diversity: You gain exposure to a whole group of segments of the market and equities. This makes you open to a wider range of stock options. It might seem as diverse as mutual funds, but the lower fees make it similar to equity investments.
  • Lower Fees: Passively managed, ETFs save you on expenses because they do not involve a management fee, service fee, payment to a board of directors, or load fees that come with sale and distribution.
  • Similar to Stocks: You can quickly find daily changes in EFT prices because they are easy to track.
  • Tax-Efficient: Unlike mutual funds, capital gains tax is paid upon the sale and by the investor. Moreover, the capital gains do not result in a tax charge when it comes to ETFs, which means it is lower than that of mutual funds. This is another reason why ETFs can be attractive to those interested in NOVA wealth management strategies that match their financial goals.

Unit Investment Trusts (UITs)
The “unit” from the trust comes from redeemable options offered by investment companies for specific periods of time based off a fixed, unmanaged portfolio — usually of stocks and bonds. Brokers handle these sales at a steady price of $ 1,000. These UITs can then be resold at the secondary market at an investor’s discretion. You may find that UITs can be a grantor trust — granting investors ownership proportional to the UITs’ underlying securities. These can be a regulated investment corporation as well, with investors jointly owning the corporation. The advantages of UITs include:

  • Options & Safety: There are usually many unit trusts available. These are managed by experts who are fluent with the unique character of each unit, saving you time in research.
  • Future Protection: With several available unit trusts, you can set up savings programs where you can funnel what you earn over time. This is perfect for those looking for security in the long-term.
  • Solid Support: These types of investment pool your resources with other investors, creating a unified front. This allows for a great deal of support to help secure the corporation.

If you experience any trouble discerning which option suits you, give AOG Wealth Management a call. We’ll be more than happy to help with your financial decisions. We aim to continue building the strong foundations of relationships that allow us to provide you with exceptional wealth management.

Contact us today and we will be happy to provide you with a free, no-obligation financial consultation.

The article and opinions in this publication are for general information only and are not intended to provide specific advice or recommendations for any individual. We suggest that you consult your accountant, tax, or legal advisor with regard to your individual situation.

Category: Blog