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Thematic Investing With UITs


Unit investment trusts (UITs) can be an attractive option for clients looking to invest in specific investment concepts or themes based on market cycles or broader structural changes in the economy. Thematic investing focuses on tactical investment opportunities that could drive market performance in the years to come. The UIT structure may be able to provide strategic and targeted access to investment themes in the marketplace not available in many other investment products.

UIT Strategy Feature: First Trust Portfolio’s Cloud Computing Portfolio Strategy

Cloud computing is defined as a technology that uses the Internet and central remote servers to maintain data and applications. This type of computing allows businesses and consumers to use applications without installation and provides access to their personal files on any device with Internet access. This technology offers more efficiency in computing by centralizing storage, memory, processing and bandwidth. In cloud computing, applications are accessible anywhere, anytime, and storage becomes, for all intents and purposes, infinite. Cloud computing acts as a global connector of the world’s information and its users.

Innovation from digital device manufacturers, bandwidth providers, and content companies are among a few of the areas that are required to experience universal computing. The Trust invests in companies that the Sponsor believes will benefit as cloud computing becomes universal.

Cloud Computing Portfolio Performance
Data Sources: Bloomberg, YCharts, First Trust Portfolios, UIT Investing, Inc. Data as of 08/31/2018.

Strategy Performance & Risk Analysis

3 Years (as of 8/31/2018)

Cloud Computing Strategy Russell 1000 Growth
Cumulative Return 101.01% 69.90%
Avg. Annual Return (CAGR) 26.20% 19.32%
Upside Capture Ratio 118.77%
Downside Capture Ratio 114.47%
Max Drawdown -22.37% -13.35%
Max Gain 138.92% 82.98%
Standard Deviation (Annualized) 0.167 0.129
Sharpe Ratio 1.479 1.431
R-Squared 0.796
Sortino Ratio (Annualized) 2.057 2.013
Treynor Ratio (Annualized) 0.214 0.185
Alpha (Annualized) 3.44%
Beta 1.150

5 Years (as of 8/31/2018)

Data Sources: Bloomberg, YCharts, First Trust Portfolios, UIT Investing, Inc. Data as of 08/31/2018.
Cloud Computing Strategy Russell 1000 Growth
Cumulative Return 175.13% 123.70%
Avg. Annual Return (CAGR) 22.43% 17.43%
Upside Capture Ratio 115.88%
Downside Capture Ratio 112.90%
Max Drawdown -19.80% -13.71%
Max Gain 175.88% 124.01%
Standard Deviation (Annualized) 0.162 0.129
Sharpe Ratio 1.331 1.312
R-Squared 0.801
Sortino Ratio (Annualized) 1.853 1.854
Treynor Ratio (Annualized) 0.192 0.169
Alpha (Annualized) 2.58%
Beta 1.123

Both cumulative and average annual returns of the unit investment trust strategy for 3, 5, 10-year periods are based on distributions received in cash and assume income and principal distributions are paid out on the payable date during the life of the unit investment trust. All distributions from the series are reinvested at the time of purchase into the following series utilized in the historical chain of the strategy. The following series of a strategy is determined by utilizing the series intended for the investment continuation of the strategy upon termination. If no series intended for investment continuation of a strategy exists, the existing primary, if available, at time of termination is utilized. Returns are calculated excluding the Transactional Sales Charges for each unit investment trust series but does reflect the Creation & Development Fee and trust operating expenses as incurred for each unit investment trust series included in the calculation. The returns do not adjust for taxes. If adjusted or taxes, the effects of taxation would reduce the performance depicted.

Past performance is no indicator of future results. Investment return and principal value will fluctuate with changes in market conditions. We make no assurance that any investment product based on an index will accurately track index performance or provide positive investment returns. An investment in units of a unit investment trust and continuing the investment in units of subsequent series of a unit investment trust strategy, when redeemed may be worth more or less than their original investment.

The Russell 1000 Growth Index measures the performance of the large-cap growth segment of the U.S. equity universe. It includes those Russell 1000 companies with higher price-to-book ratios and higher forecasted growth values. The Russell 1000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the large-cap growth segment. 

Any written analysis appearing herein are statements of opinion and not statements of fact. The data and information contained herein has been obtained from sources believed to be reliable. However, we do not warrant the accuracy or completeness of any information, data or analysis contained herein and we provide no assurance that the content of this material is, in fact, accurate. This information, data, analysis and any opinions contained herein are for informational purposes only and does not constitute investment advice or a recommendation to buy, sell or hold a securities product or strategy. UIT Investing, Inc. does not provide investment advice and is not responsible for trading decisions, suitability determinations, damages or other losses resulting from, or related to, the information, data, analyses or opinions or their use.

All investments carry a certain degree of risk and there is no assurance that an investment will provide positive performance over any time period. Past performance is not indicative of future results and should never be relied upon in making an investment decision or recommendation.

Investors should consider the investment objectives, risks, charges and expenses of the unit investment trust(s) carefully before investing. The prospectus contains this and other information about the unit investment trust(s). This may not contain a complete discussion of investment terms or risks and you should only rely on the information contained in relevant prospectus and/or offering documentation prior to purchasing an investment product or making a recommendation to a customer. To obtain a prospectus, investors should contact their financial advisor. Please read the prospectus carefully before investing.

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