Investment Trusts

Description

Investment Trusts are collective investment funds owned by the shareholders and run by a managing company.

Investing in an investment trust has several advantages:

You are spreading your risk as the fund invests in severalcompanies rather than just one.

You benefit from the expertise of a professional fund manager.

You can save regularly via an Investment Trust savings schemewhich reduces dealing costs.

Many investors prefer Investment Trusts to other collective fundssuch as Unit Trusts. This is because of several advantages:

The company raises the money for investments when the company is created.From then on, the buying and selling of shares in the company has no effect on core investment. This is unlike a Unit Trust, where the flow offunds into and out of the fund can influence investment decisions.

Investment Trusts companies have Boards Of Directors, whose prime aimis to ensure the best possible return for shareholders.

The total value of all listed shares is often substantially less than the value of investments held by the company - so you whenyou buy a share you 'Buy at a discount'. This reflects the uncertainty involved in cashing out an investment, especially withunlisted companies. Comparably, Unit Trusts value the units as thesame as the nominal value of their investments.