Unit Investment Trusts Up 28% in May From Year Earlier, Trade Group

Total assets in unit investment trusts reached $5.29 billion in May, up 28% from the same period a year earlier, according to the Investment Company Institute.

Data from the ICI also show that unit investments drew $1.65 billion of fresh assets in May, roughly triple the $532 million of assets they drew in April.

Most of the increase came from equity trusts, which garnered $1.26 billion of fresh assets in May, for a total of $3 billion.

"People are becoming more aware of these equity trusts, and you've got a good market where the Dow has been up," said Jack Tierney, a vice president with Van Kampen American Capital, a unit investment trust company that markets through banks.

The story hasn't been as rosy for taxable and tax-free unit investment trusts, which have lost assets in recent months as investors have been enamored of equity markets.

Assets in tax-free bond trusts hit $1.67 billion in May, a slight drop of 1.77% from May of last year. Assets of taxable bond trusts reached $624.8 million, down 17% from the 1994 period.

"Investors have been interested in the hot stock market," said Jerome Contro, vice president, national bank division at John Nuveen & Co.

The securities in a unit investment trust portfolio are different from a mutual fund because they are never traded. Management fees are generally lower too. Bond trusts also offer more predictable returns than comparable bond mutual funds because the underlying securities - and their coupon rates - don't change.

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