Investment Trusts
Investment trusts fall underneath the category of investment funds and are a way of investing in shares, bonds and property both in the UK and worldwide. They have a more complex structure than other investments because investment trusts are set up as companies in their own right and are susceptible to performances on stock exchanges. As such, when you invest in an investment trust you become a shareholder in that company.
Advantages of Investment Trusts:
- Money is pooled together with other investors so there is a greater amount being invested.
- Investments are spread across a range of different securities and assets thus spreading your risk.
- Consequently, an investment trust should be lower risk than buying individual shares.
- Lower annual charges than other types of investments such as unit trusts.
- Potential for higher returns because investment trusts work on 'gearing'.
Things To Consider When Choosing an Investment Trust:
Re-evaluate - You should review your investment trusts regularly according to your financial circumstances. This can be done by consulting a financial advisor.
Charges - Interest charges on investment trusts tend to be lower than other investment funds. Understand all of the charges you will pay on your fund.
Risk - Investment trusts come with a greater financial risk than some other investment funds but there is a chance for greater growth or income accordingly.
Tax - Different funds have varying tax implications. In some cases it may be best to employ the help of a financial advisor and switching to a fund suitable more suitable for you.
Unless well versed in investments and the stock markets, deciding on the best investment trusts can be a difficult task. Discussing your options with an independent financial advisor may help you find the best trusts waiting for your investment.
Additional information can be found on our investment trusts explained page.
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