uit: 101 webinar
TRANSCRIPT
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UIT 101 Webinar
December 12, 2012
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Today’s Presenters
• Moderator:– Suzanne Cullinane, Manager, Operations
Henderson Global
• Panelists:– Scott Anderson, Partner
Chapman and Cutler LLP – Jack Tierney, Executive Director, Unit Trust Product
Development, ResearchInvesco
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Scott Anderson
PartnerChapman & Cutler
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What is a UIT?
Investment Company Act of 1940"Unit investment trust" means an investment
company which (A) is organized under a trust indenture, contract of custodianship or agency, or similar instrument, (B) does not have a board of directors, and (C) issues only redeemable securities, each of which represents an undivided interest in a unit of specified securities
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What is a UIT?
Plain English
Investment vehicle that holds a “fixed” portfolio of investments for a defined life and offers redeemable units to investors
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What is a UIT?
Plain English
Investment vehicle that holds a “fixed” portfolio of investments for a defined life and offers redeemable units to investors
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What is a UIT?
Investment Vehicle UITs are organized as common law trusts (not
statutory or business trusts) governed by a trust agreement/indenture
No board of directors/trustees Key Parties:
– Depositor (Sponsor)– Trustee– Evaluator– Supervisor
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What is a UIT?
Plain English
Investment vehicle that holds a “fixed” portfolio of investments for a defined life and offers redeemable units to investors
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What is a UIT?
“Fixed” Portfolio Portfolio is selected at UIT inception by the Sponsor, another
investment manager or by applying a quantitative screening strategy No money manager actively buying and selling portfolio securities
during life No “investment adviser” Portfolio is “supervised” by a “Supervisor” that provides portfolio
“surveillance” Depositor can direct the Trustee to sell securities to:
– pay expenses– pay unit redemptions– in limited cases to protect the UIT (e.g., serious adverse credit factors related to an issuer)
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What is a UIT?
Plain English
Investment vehicle that holds a “fixed” portfolio of investments for a defined life and offers redeemable units to investors
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What is a UIT?Investments
• U.S. and Non-U.S. Stocks• U.S. and Non-U.S. Corporate Bonds• Municipal Bonds• Treasury and Non-U.S. Government Securities• Preferred Securities• Government Agency and GSE Securities• Open-End Fund Shares• Closed-End Fund Shares• Exchange-Traded Fund Shares• Options (including covered call strategies)• OTC Derivatives• Commodities
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What is a UIT?
Plain English
Investment vehicle that holds a “fixed” portfolio of investments for a defined life and offers redeemable units to investors
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What is a UIT?
Defined Life Equity Style
– UIT has stated Mandatory Termination Date in prospectus
– Current market is primarily 15-24 months Fixed-Income Style
– UIT terminates when last bond matures, is called, or is otherwise liquidated from portfolio
– Most maturity ranges typically offered
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What is a UIT?
Plain English
Investment vehicle that holds a “fixed” portfolio of investments for a defined life and offers redeemable units to investors
![Page 15: UIT: 101 Webinar](https://reader035.vdocuments.net/reader035/viewer/2022081521/58edcd1b1a28ab801f8b45a5/html5/thumbnails/15.jpg)
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What is a UIT?
Redeemable Units UIT units are “redeemable securities” under the
Investment Company Act of 1940 Just like open-end fund shares
– Daily redemption right like open-end funds– Forward pricing rules apply to purchases and redemptions
Daily NAV and public offering price computed by:– Trustee– Evaluator (Depositor, its RIA affiliate or third-party
company)
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Who are the Key Players?
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Comparison of “Typical” Registered Funds
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Comparison of “Typical” Registered Funds
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Life of a Sample Equity UIT
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Life of a Sample Fixed Income UIT
6-10
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Jack Tierney
Executive Director – Unit Trust ProductDevelopment, Research
Invesco
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Understanding Unit Trusts
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Unit Trusts: A Wide Variety of OfferingsQuantitative Equity Strategies “Enhanced Indexing”
Alternative Strategies Multi-Asset Class
Closed-End Strategies Alternative Income
Fixed Income Strategies Traditional Taxable and Tax-Free
International & Global Strategies Developed and Developing Markets Thematic, Specialty and Sector StrategiesFocused and Research-Based
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Unit Investment Trust Advantages • Speed to market, transparency, product innovation
• Fixed-income yield curve, credit mix opportunities.
• Tactical portfolio ideas centered around specific firm research and market shifts.
• Rollover features offer high percentage growth opportunities for FAs, sponsors, investors
• Internal expense ratio advantages over open-end funds
• Access into new investment strategies, markets by utilizing instruments such as CEFs, ETFs
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Unit Investment Trust Industry Challenges
• Pricing structure– vs. ETFs– vs. load-waived open-end funds– potential in 401k type plans
• Industry Data Reporting vs. ETF, Open-End Fund Industry
• Visibility at investor, media, analytical firm levels
• Growth Opportunities outside US
• Investor analytics/demographics
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Q & A
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Thank you for attending!