What is an Investment Trust?

Put simply, an Investment Trust is a company that exists to invest in other companies. The advantage to you of using an investment trust is that you can pool your money with other investors, so that the investment trust manager can invest in a wide variety of areas. This gives your investment trust more chance of generating a decent level of exposure to markets that you might not have the confidence to invest in otherwise.

Investment Trusts allow you to pool your risk so that they use their professional expertise to invest into different companies and sectors. Also, you can save as little as £25 per month into an investment trust, or £250 as a lump sum. This makes them a very accessible investment.

Click here to see a leaflet on our portfolio management service.

How is an Investment Trust different?

An investment trust is different to a unit trust. It is a closed ended fund, raising money initially when it issues shares. However, the investment trust can make use of its status as a company to borrow against its assets. This can be advantageous with the right market conditions as it will not have to sell the shares to finance this. A note of caution, however, as this can be risky, especially if the investment trust borrows a high amount.

The price of an investment trust is determined by the stock market, and so a trust can be bought at a discount when the conditions allow.

Click here for a leaflet on investment risk.

Why not contact us to find out more about an investment trust?