Key features to bear in mind

Investment trusts have a closed-ended structure, 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. Consequently, the fund manager has more opportunity to take longer-term investment decisions. With an investment trust, fund managers are also able to borrow money, or ‘gear’ their portfolios to exploit a favourable purchasing opportunity without having to sell existing investments.

You may be familiar with the way OEICs’ and unit trusts’ prices are calculated, based on the value of their assets. Here again, investment trust shares are different. Since the stock market sets the price of shares in an investment trust, the shares will usually trade at a discount to the underlying asset value of the assets in the company itself.

Lastly, since investment trusts are companies listed on the stock market, they must have independent boards of directors directly answerable to the shareholders (that is, the investors).

Why choose an investment trust for your clients?

• An economical way to invest
  As investors’ money is pooled in an investment trust, the dealing and administration costs are also pooled
• Investment flexibility
  It’s very easy to buy shares in investment trusts, and your clients can invest small lump sum amounts on a regular basis - from as little as £50 a month
• Spreading risk
  Investment trusts own shares in many companies, so although your clients buy shares in only one investment trust, they’re accessing a diversified portfolio
• Professional fund management expertise
  Your clients can gain access to our professional expertise, across a range of asset classes and with different income or growth profiles
• Low charges
  Most investment trusts have low internal charges, thanks to the role of their independent Board of Directors