Investment Trusts

Investment Trusts offer investors a relatively inexpensive way to invest. They are often overshadowed by the more widely known Unit Trusts and OEICs.

Investment Trusts are listed companies that issue shares and are a form of collective investment that can be held within an ISA. They employ a professional fund manager who decides in which companies (usually 50) and countries to invest the pooled funds on behalf of the investors. In this way they have the same advantages of Unit Trusts and OEICs but they are closed-ended, meaning only a limited number of shares are issued.

Unlike Unit Trusts and OEICs, investment trusts can borrow money on behalf of shareholders therefore increasing their risk. The price you pay is based on demand not just the value of the underlying asset, so the value of your Investment Trust shares do not just depend on the value of the shares in the companies it holds, but also on the demand for the Investment Trust itself.

You can expect to pay lower annual fees for this type of investment but if you buy through a stockbroker, expect to pay a dealing cost, stamp duty and a bid/offer spread on the shares.

To find out more about Investment Trusts, or to invest, please call the TQ Invest Team on 0800 294 7221.