Investment trusts

How do they work?

Investment trusts are a type of collective investment, that allow you to pool your money with other investors. They invest in other companies to make a profit for their shareholders. But they differ to other collective investment schemes, like OEICs and unit trusts, as they’re actually public limited companies in their own right.

As with any listed company, you buy and sell investment trust shares on the stock market, so the price you pay depends on supply and demand. Investment trusts are closed-ended, meaning there’s only a limited amount of shares for sale. So when investors buy and sell these shares, the trust’s underlying portfolio isn’t affected. This lets fund managers take longer-term investment decisions.

Why choose an investment trust?

It’s very easy to buy shares in investment trusts, and you can pay in small lump sum amounts on a regular basis – from as little as £50 a month. They’re also a fairly economical way to invest in the stock market. Most have low internal charges, thanks to the role of their independent Board of Directors, while the dealing and administration costs are pooled.

Find out more on our range of investment trusts