Fifth Third Bancorp of Cincinnati is introducing a unit investment trust.
The Fifth Third Targeted Industrial Growth Portfolio, to be launched Sept. 20, will invest in a fixed basket of about 50 stocks from the technology, financial services, and health-care industries.
Those industries are the "most likely to outperform the market in the next five years," said G. Douglas Voelz, a Fifth Third Securities vice president.
The initial unit price will be $10, and the trust will probably stay open for three to four months, he said.
Like mutual funds, unit investment trusts are portfolios of securities, but unlike mutual funds, they comprise only a limited number of equities, have a fixed maturity date, and are not actively managed.
Because of the need to create a secondary market in the units, the trusts have proven more popular with brokers than with banks, said Geoffrey H. Bobroff, a mutual fund consultant in East Greenwich, R.I. In addition, the trust packager must raise a fixed amount quickly or risk being stuck with unsold securities, he said.
Fifth Third gained expertise in the field in June 1998 when it bought the Ohio Co., a Cleveland brokerage firm that has been in the unit trust business since the early 1990s.
Shares in Fifth Third's first unit trust, the Strategic Communications and Technology Trust, which closed June 1, rose from $10 at the time of initial investment to more than $20 at closing, and its value now exceeds $40 million, Mr. Voelz said.
The industrial growth portfolio will have a broader orientation than its predecessor but will probably invest in some of the same stocks, Mr. Voelz said.
He said that, though the new trust may not perform as well as its predecessor, it should be less volatile and, accordingly, appeal to a wider range of investors.
There are plans to "have a unit investment trust open at all times that expresses our best investment ideas," Mr. Voelz said, adding that if the trusts continue to be popular Fifth Third might consider having more than one open at a time.
