The units are made up of different asset classes of securities . They are traded together, but bought and sold as a unit. Although little known in the market, they are good alternatives for those who would like to take advantage of the stock market .
So, instead of buying specific shares of a company, you can opt for the units. Generally, the pool includes 1 common share and 2 preferred shares—or vice versa. By acquiring units, you increase your portfolio and guarantee benefits, such as preference in the distribution of dividends, high profitability and the right to vote at the meeting.
Do you want to know more about the units, how they are composed and the differences between ON and PN shares? Read on and ask your questions.
Contents [ hide ]
- 1What are units?
- 2How are units composed?
- 3What are the differences between units, ON shares and PN shares?
- 1Common shares
- 2Preferred Shares (PN)
- 3Units
- 4How to purchase units?
What are units?
Units are also called share deposit certificates and comprise assets of different classes . They are a kind of furniture package composed, generally, by preferred (PN) and common (ON) shares.
Despite being less common in the market, the units offer the same advantages as the assets that are part of the package. For example, you can purchase units made up of one or more share classes, such as 2 common shares + 1 preferred share. Choosing the number of actions will depend on your goals.
If the units are formed by ON and PN shares, the investor has the right to vote at the meeting and priority to receive earnings. That is, the person gets the advantages of all the assets included in the package. She can also subscribe to shares if necessary.
This, incidentally, is one of the biggest attractions for those who want to apply in this category. The benefits are advantageous thanks to the mix of modalities of assets included in the units . However, usufructs are limited to the portion of the asset within the package.
How are units composed?
Units consist of one or more classes of securities traded together. Therefore, in the market, they are sold or bought as a unit, but they can be composed of a preferred share and a common share, for example .
Units are traded on the Brazilian stock exchange, and they are identified by the number 11 at the end of the company code. The shares of Banco Inter , for example, are categorized as BIDI4 and BIDI3 while the units are entitled BIDI11.
See some more units:
- AES Tietê (TIET11): 1 ON share + 4 PN shares;
- Alupar (ALUP11): 1 ON share + 2 PN shares;
- Energisa (ENGI11): 1 ON share + 4 PN shares;
- Klabin (KLBN11): 1 ON share + 4 PN shares;
- Santander Brasil (SANB11): 1 ON share + 1 PN share.
The structure of the units depends on the company’s capital. As it is not a single stock, but a set of different assets, not all organizations offer this type of investment .
To find out how each unit is composed, you can consult the list on the B3 website .
What are the differences between units, ON shares and PN shares?
Before investing in units, it is essential to understand the difference between common (ON) and preferred (PN) shares.
Ordinary actions
The common shares are those that represent the right to vote in the assembly for all holders . In addition, shareholders who acquire these shares receive dividends according to the company’s criteria and after preferred shareholders. In other words, by acquiring common stock, you become a kind of partner .
The risks of common stock are greater, but so are the rewards. If a company makes a lot of profit, the holder of preferred shares receives a fixed amount. On the other hand, those who invested in ON shares gain a good part of this profitability.
Furthermore, when smaller companies are sold to large corporations, those who invest in common stock earn more.
Common shares are represented by the number 3 at the end of the code. For example: ITUB3, BIDI3 and PETR3.
Preferred shares (PN)
Those who purchase preferred shares (PN) have priority to receive the company’s dividends . This is the greatest benefit of this type of negotiation, however, those who choose PN shares do not have the power to influence the general meeting of shareholders.
In cases of bankruptcy or closure of a company, preferred shareholders are more likely to get back a portion of the investments. In Brazil, PN shares have more liquidity on the stock exchange .
In addition, PN shares are callable, meaning the company can get them back whenever it wants. Minority shareholders are also less protected by preferred shares because they are not entitled to vote.
On the other hand, preferred shares are considered more advantageous for beginners or for those who want to start small. This is because they have greater liquidity and are easier to negotiate, in addition to offering advantages in the distribution of dividends.
Preferred shares are identified by number 4 at the end of the acronym, as in ITUB4, BIDI4 and PETR4.
Units
As we have seen, preferred and common shares have some differences from each other. Units, therefore, are the combination of one or more shares of these categories, forming a type of investment package. Anyone wishing to buy 1 common share + 4 preferred shares, for example, can opt for the units.
Units function as a union of the two types of actions . In some cases, it is possible to obtain the benefits of both: dividend income and voting rights. However, they are good alternatives especially for those who already have some experience in the financial market.
How to purchase units?
Units are traded on the stock exchange; so, the process is similar to buying shares. To purchase units, open an account at a brokerage firm, research which offers you would like to make, place buy orders and that’s it ! Then, just follow the movements through the home broker.
Units are variable income investments, unlike repurchase agreements , for example. So, as prices change frequently, it’s critical to keep up with fluctuations in stock values.
Furthermore, defining a strategy and analyzing your profile is part of the investment. So, if you have doubts and insecurities about the acquisition, seek help from a specialized company to facilitate the process.
