Investment Trusts

An Investment Trust is simply a company that invests in the shares of other companies. As a company, the Investment Trust has shares which are quoted on the stock market. Unlike Unit Trusts and OEICs, an Investment Trust is a 'closed ended' investment vehicle where regardless of the number of investors the number of shares does not change. As such, although the share price of an Investment Trust is to an extent related to the value of the investments in the fund, it is ultimately dictated by supply and demand. The value of the shares will therefore depend on the number of investors looking to buy or sell the shares and consequently Investment Trusts trade at either a discount or premium to the value of the assets it holds.

As a company, Investment Trusts have the ability to borrow money which can then be used to buy further investments, this being known as gearing. Whilst this can have the positive effect of boosting returns if investments perform well, losses can be exaggerated if the investments perform poorly.

Investment Trusts frequently issue different types (classes) of shares. The different classes of shares will suit different investors dependent on the investors attitude to risk and their need for income or growth.

THE VALUE OF INVESTMENTS AND INCOME FROM THEM MAY GO DOWN. YOU MAY NOT GET BACK THE ORIGINAL AMOUNT INVESTED.

Edmans IFA Limited is authorised and regulated by the Financial Conduct Authority.
Registered in England and Wales no. 5481274. Registered office: 146 New London Road, Chelmsford, CM2 0AW
Edmans IFA is entered on the FCA register (www.FCA.gov.uk/register) under reference 436338.