Investment Trusts

What are Investment Trusts?

An investment trust is a listed company with shares quoted on the London Stock Exchange, which invests in the shares of other companies or in fixed-interest securities, unquoted securities or property. As a quoted company, the share price of an investment trust is determined by the supply and demand for its shares on the stock market.

An investment trust has an independent board of directors who are responsible for looking after shareholders interests.

How do Investment Trusts Work?

When shares in investment trusts (IT) are purchased, you are buying a 'share' in all of the companies that the IT decides to invest in. The dividend income you will receive from the IT, and the value of their IT shares, will rise and fall in line with the performance of the shares which the IT owns and market forces.

There are a number of tax advantages to IT investment, and they are well suited to those who want to make regular monthly savings for their retirement, for their children, or for specific purposes like school fees or house purchase.

How risky are Investment Trusts?

The risk associated with an IT is less than individual equities because an IT is a basket, which is balanced out by a number of equities. However, an IT only consists of equities so if the equity market drops it is not possible to switch into another type of investment class.

Investment trusts are a useful vehicle for people who want to:

• Invest in the stockmarket over the medium to long-term.
• Want to spread their costs, risk and minimise charges.
• Not spend too much time monitoring their investments.

How much will it cost?

Investment trusts are traded like shares at normal dealing commisison from £9.95 online. See full rates and charges.

What type of Account do I Need?

You can invest into investment trusts through our:

• Trading account.
• Trading Plus account.
• Trading ISA.
• SIPP Account.