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Finding Superior Risk-Adjusted Returns Among UIT Strategies


Yosemite Cliff

The broad stock market has experienced multiple spikes in volatility over the past three years as indices have experienced new highs and subsequent pullbacks.

When comparing rolling 20 and 50 day standard deviations of daily returns, the standard deviation over 20 days exceeded the 50 day measure more than 40% of the time, representing significant short term spikes in volatility:

S&P 500: 20D vs 50D Standard Deviation
Chart Data Source: YCharts

During this period of increased volatility, the strategies listed below have maintained a lower level of volatility and achieved higher returns than the S&P 500.

These strategies offer exposure to quality companies with ample cash flow that allow them to increase shareholder value through dividends and share buybacks. These cash flows to shareholders can help maintain share prices throughout periods of market pullbacks.

StrategyCumulative Total Return
(3 Years)
Standard Deviation
(3 Years)
Guggenheim Diversified Dividend & Income Portfolio37.894%11.579%
First Trust Diversified Income & Growth Portfolio33.825%10.903%
AAM The Dividend Income Value Strategy Portfolio33.673%11.125%
S&P 50030.401%12.992%
3 Year Cumulative Return vs 3 Year Standard Deviation
Data Sources: Bloomberg, YCharts, Guggenheim Investments, First Trust Portfolios, Advisers Asset Management. Performance data 3 years through December 31, 2018.

Cumulative returns of the unit investment trust strategy are based on distributions received in cash and recognized on the ex-dividend date during the life of the unit investment trust. Historical strategy performance is derived by utilizing the average daily performance of the outstanding series of a UIT strategy. 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 unit investment trust strategy, when redeemed may be worth more or less than their original investment.

The S&P 500 Index (Standard & Poor’s 500 Index) is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies by market value, The index is widely regarded as the best single gauge of large-cap U.S. equities.

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.

Photo by Cristofer Jeschke on Unsplash

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