What is a “widely held fixed investment trust” (WHFIT)?

What is a “widely held fixed investment trust” (WHFIT)?

Introduction to Widely Held Fixed Investment Trusts

In the world of finance and investments, there are countless options available to investors. One such option is a Widely Held Fixed Investment Trust, or WHFIT. This investment vehicle has been around for some time, but many investors may not be familiar with the concept. In this article, we will delve into the details of what a WHFIT is, how it works, and the benefits it offers to investors. So, let's get started!

Understanding the Basics of a WHFIT

A Widely Held Fixed Investment Trust, or WHFIT, is a type of investment vehicle that pools funds from multiple investors to invest in a fixed portfolio of securities. These securities typically include bonds, stocks, and other income-producing assets. The primary goal of a WHFIT is to provide investors with a steady stream of income, which is generated from the interest or dividends paid by the underlying securities. This income is then distributed to investors on a regular basis, typically monthly or quarterly.


The term "widely held" refers to the fact that a WHFIT has a large number of investors, making it more akin to a mutual fund or an exchange-traded fund (ETF) than a traditional trust. This large investor base helps to reduce the overall risk associated with the investment, as the trust's assets are diversified across a wide range of securities.

How WHFITs are Structured

WHFITs can be structured in various ways, depending on the specific investment objectives and strategies of the trust. However, there are some common elements that most WHFITs share. First and foremost, a WHFIT is typically organized as a grantor trust. This means that the trust is not considered a separate legal entity for tax purposes, and the income generated by the trust is passed through to investors directly, who are then responsible for reporting and paying taxes on that income.


Additionally, a WHFIT will typically have a trustee, who is responsible for managing the trust's assets and ensuring that the trust operates in accordance with its governing documents. The trustee will also oversee the distribution of income to investors and provide regular updates on the performance of the trust's investments.

Advantages of Investing in a WHFIT

There are several advantages to investing in a WHFIT, which can make it an attractive option for certain types of investors. Some of these benefits include:

  • Income Generation: The primary goal of a WHFIT is to generate a steady stream of income for investors, making it an attractive option for those seeking regular cash flow from their investments.
  • Diversification: A WHFIT typically invests in a wide range of securities, which can help to reduce the overall risk associated with the investment.
  • Professional Management: The trustee of a WHFIT is responsible for managing the trust's assets, which can provide investors with access to professional investment management expertise.
  • Tax Efficiency: As a grantor trust, a WHFIT is not subject to entity-level taxes, and the income generated by the trust is passed through to investors directly. This can result in a more tax-efficient investment structure for some investors.

Potential Drawbacks of WHFITs

While there are several advantages to investing in a WHFIT, there are also some potential drawbacks that investors should be aware of. These include:

  • Limited Liquidity: Unlike mutual funds or ETFs, which can be bought and sold on a daily basis, WHFITs may have limited liquidity, meaning it may be more difficult for an investor to sell their interest in the trust.
  • Fees: As with any professionally managed investment, there may be fees associated with investing in a WHFIT, which can impact the overall returns of the investment.
  • Tax Complexity: While a WHFIT can offer tax efficiency for some investors, the pass-through nature of the trust's income can also result in additional tax complexity and reporting requirements for investors.

How to Invest in a WHFIT

If you're interested in investing in a WHFIT, there are several ways to do so. One option is to invest directly through the trust itself, which may require a minimum investment amount and could be subject to fees or commissions. Alternatively, you may be able to invest in a WHFIT through a brokerage account, which can provide access to a broader range of investment options and potentially lower fees.


Before investing in a WHFIT, it's important to carefully research the specific trust and its underlying investments to ensure that it aligns with your overall investment objectives and risk tolerance. Additionally, consulting with a financial advisor can help you determine if a WHFIT is an appropriate addition to your investment portfolio.

Conclusion: Is a WHFIT Right for You?

Overall, a Widely Held Fixed Investment Trust can be an attractive investment option for those seeking a steady stream of income and diversification within their portfolio. However, it's important to weigh the potential benefits against the drawbacks, such as limited liquidity and tax complexity, before making an investment decision. By understanding the basics of WHFITs and working with a financial advisor, you can make a more informed decision about whether this type of investment is right for you.

Written by John Smith

I'm a passionate investor, looking for new opportunities to grow my portfolio. I have a keen eye for detail and spend my time researching and analyzing stocks and bonds. I'm always looking for ways to make my investments work for me and to maximize my returns.