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UIT Strategy Ideas: Value Investing

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Value Investing with Unit Investment Trusts

  • The winding down of quantitative easing by the Federal Reserve has coincided with the rise in short term interest rates
  • Since growth stocks base more of their valuations off of future cash flows, they can be more sensitive to interest rate changes – particularly long term rates
  • Value stocks tend to be established companies that typically compensate investors sooner which can make them less sensitive to changes in interest rates1
  • As interest rates have maintained an upward trajectory, we have seen growth stocks exhibit a higher level of volatility
  • Increasing exposure to value stocks can decrease overall portfolio volatility during a period of rising interest rates while maintaining participation in the equity market

Rolling 20 Day Standard Deviation: Russell 1000 Growth, Russell 1000 Value vs. 1 month & 10 Year Treasury Rates

Observation Period: 1/29/2014 – 12/31/2018

Chart Data Source: YCharts

Strategy Ideas

Trust/BenchmarkCumulative ReturnAverage Annual Return (CAGR)Standard Deviation (Annualized)Sharpe Ratio (Annualized)Alpha (Annualized)
Guggenheim Diversified Dividend & Income Portfolio 50.49%8.520.1240.7241.40%
Strategy Benchmark: Russell 3000 Index 46.30%7.91%0.1330.638
First Trust Equity Income Select 41.94%7.26%0.1260.6221.69%
Strategy Benchmark: Russell 1000 Value Index 33.43%5.94%0.1290.511

Data Sources: Bloomberg, YCharts, Guggenheim Investments, First Trust Portfolios.  Performance data 5 years through December 31, 2018.

1 Equity Investing in a Rising Rate Environment, Hotchkis & Wiley


Both cumulative and average annual returns of the unit investment trust strategy 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 3000 Index is a market-capitalization-weighted equity index maintained by the FTSE Russell that provides exposure to the entire U.S. stock market. The index tracks the performance of the 3,000 largest U.S.-traded stocks which represent about 98% of all U.S incorporated equity securities.

The Russell 1000 Value Index is a subset of the securities found in the Russell 1000.  The stocks included in the value index are selected based on a “probability” of value as measured by their relative book-to-price (B/P) ratio. The Russell 1000 Index is an index of approximately 1,000 of the largest companies in the U.S. equity market.

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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