Investment Trust

An Investment Trust is a collective investment fund which is traded on the stock exchange just like any other company. It is similar to an Open Ended Investment Company where the investor purchases shares in the company, and the company shares in the company, which owns underlying fund assets. However, with an investment trust the number of shares in issue is generally fixed, and permission from the shareholders (the investors) must be obtained before issuing more shares. This makes it a closed fund, unlike an OEIC which as the name implies is open ended and can issue new shares or buy back shares without investors approval.

Investors in an Investment Trust can also sell shares on the open market to other investors via market makers, unlike OEIC's and Unit Trusts where the fund managers sell and buy back shares directly from the investor.Unlike Unit Trusts and OEIC's where the price of the shares or units reflect the price of the assets, the price of an investment trust can often be undervalued (at a discount) or overvalued (at a premium) to the Net Asset Value (or NAV) of the underlying assets, and so it is possible for an investor to by the net assets at typically a 5 - 15% discount to their last value.

The management charges for investment trusts are usually a bit cheaper than for OEIC's and unit trusts, and although there are no initial charges to worry about, there is the usual stock market spread to take into account.

What to do if you need more help

If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.

We hope you found this information useful.

return to previous menu…

Sponsors Advertising

Copyright © Steve Gears Associates. All rights reserved. No portion of this site may be reproduced without written permission. All Trademarks are freely acknowledged.The information on this site is based on UK data unless otherwise indicated. Non-UK visitors should check with experts within their own legal jurisdiction before relying on information presented here.

Website Terms of Use |  Other Resources |  Site Map