How can UITFs acquire their underlying investments?

Unit Investment Trust Funds (UITFs) can acquire their underlying investments through both primary and secondary markets. The primary market refers to the initial issuance of securities, where UITFs can purchase assets directly from issuers, which often allows them to buy at the original offering price. This is particularly beneficial for obtaining high-quality assets or obtaining them at more favorable terms prior to their launch into the secondary market.

On the other hand, the secondary market is where existing securities are traded among investors rather than directly from the issuer. UITFs actively participate in the secondary market to diversify and adjust their investment portfolios by acquiring assets that are already in circulation. This flexibility in sourcing investments from both markets allows UITFs to manage their portfolios effectively, aiming for optimal returns and balanced risk exposure.

The answer clearly reflects the versatility in the approach that UITFs adopt for asset acquisition, which is essential for portfolio management and responding to market conditions.