How do Equity UITFs and Equity Mutual Funds differ?

Equity UITFs and Equity Mutual Funds, while both falling under the category of equity investments, differ in their structure and management style. Equity UITFs (Unit Investment Trust Funds) are not legally considered as mutual funds, even though they may often invest in similar types of securities, namely stocks. UITFs are typically established as a trust, and investors purchase units in the trust rather than shares in a company. This distinction in structure can also affect how they are regulated and managed.

The management of UITFs tends to be more passive, often following a predetermined investment strategy, without actively managing the portfolio. In contrast, Equity Mutual Funds can have more actively managed strategies, where fund managers may buy and sell stocks based on market conditions and investment research, aiming for higher returns.

Furthermore, Equity UITFs can have varying risk profiles depending on their specific investment allocation, similar to mutual funds, but this does not inherently make UITFs riskier; rather, it boils down to the underlying assets and management approach.

Thus, the correct answer highlights that these two types of funds are not the same, emphasizing the key distinction in their structural and operational framework.