Question

Would you expect a typical open-end fixed-income mutual fund to have higher or lower operating expenses than a fixed-income unit investment trust? Why?

Short answer

Unit Investment Fund

Step-by-step solution

Definition

Open-end fixed-income mutual fund and fixed-income unit investment trust are subsets of mutual fund categorized by investment policy.

Explanation of choice of fund type

An open-end fund will have higher fees since they are actively marketing and managing their investor base. On the other hand, a unit investment trust need not spend too much time on such matters since investors find each other.