How do investors earn from UITFs?

Investors earn from Unit Investment Trust Funds (UITFs) primarily through changes in the Net Asset Value Per Unit (NAVPU). The NAVPU represents the value of the UITF's total assets divided by the number of outstanding units. When the underlying assets of the UITF, such as stocks or bonds, increase in value, the NAVPU rises, allowing investors to potentially sell their units at a higher price than their purchase price, resulting in a capital gain.

Moreover, the performance of a UITF is influenced by various factors, including market conditions and the management strategies employed by the fund managers. As the performance improves, the NAVPU increases, providing a clear indication of the fund's value and potential returns to the investors.

In addition to the NAVPU appreciation, UITFs may also distribute income from dividends or interest earned from their portfolios, but the primary way investors gauge their earnings is through the changes in the NAVPU. This makes understanding how NAVPU changes are critical for investors looking to evaluate their investments in UITFs.