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What is an investment trust
| Price Ord 418.00 | NAV 420.36 | Prem/-Disc -0.56 | Dividend Yield 1.38 | Updated 03/07/2008 |
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What is an investment trust?
An investment trust is simply a public limited company that issues shares in exchange for cash from investors. These cash funds are then pooled and reinvested in assets such as other stock market shares, bonds or property.
It’s the role of asset management companies such as AVI to plan and oversee investments on behalf of investment trusts and to ensure they deliver as profitable a return as possible for trust shareholders.
What’s the advantage of investment trusts?
For the private investor, putting money into an investment trust has several benefits:
- It allows you to ‘pool’ your money with others’, giving you access to stock market returns on a much larger scale than you might be able to achieve on your own
- It spreads your risk; investment trusts own a vast range of shares, so you’re not tied to the fortunes of just one or two companies
- You get the benefit of having your investment overseen by professional fund managers with many years’ experience
- Most investment trusts have low internal charges, so more of the money your investment earns comes to you
- You can enjoy stock market returns from a relatively small investment... sometimes as little as £50 per month
