Investment Trusts

Investment trusts are companies established to invest money for shareholders. These companies are commonly found in the United Kingdom. Investment trusts invest the money of shareholders in property, bonds, shares and other assets. They look for assets that can increase in value in the future. A fund manager is usually appointed by a board of members. The fund manager then decides where to invest the shareholders’ money.

One of the best things about investment trusts is that the trust doesn’t need to liquidate assets so that shareholders can recover their money. Investment trusts also pay good dividends and can provide great returns when managed properly. Investment trusts are different from other investments. Here are some of them.

Shareholder Rights

You become a shareholder when you invest money in an investment trust, so you are given the right to vote on matters like making modifications to the investment policy or selection of directors. Investment trusts can also borrow money to capitalize on investment opportunities. Borrowing can boost the returns for you. However, it can also increase the possibility of losses if the value of assets falls.

Closed-ended

Investment trusts have a predetermined number of shares. The fund manager can sell and invest assets when they think it’s the right time. This means the primary capital investment base is quite stable. Compared to SICAVs and OEICs, investment trusts generally have smaller operating costs. As such, their charges are usually lower. Investment trusts have a board of directors that protects the shareholders’ interests.

Some investment trusts also offer subscription shares. These shares allow shareholders to purchase full shares in the investment trust at some point in the future at a set price. You can talk to your financial adviser if you are not sure about investing your money in an investment trust.

Unit Trust Pricing is Based on Net Asset Value

Unit trust pricing depends on Net Asset Value. Investment trusts also don’t have an initial charge. Shares in investment trusts can be sold and purchased at a price that’s lower or higher than NAV. As such, you can purchase shares in investment trusts at a lower price. If the share price is higher than NAV, the shares are believed to be trading at a premium. If the share price is lower than NAV, the shares are trading at a discount.

Talk to your financial adviser if you have doubts about investing in investment trusts. For more information, visit http://whichtrust.com/.

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