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  • Investment Trusts

    Why not take the easy way? Invest in lots of shares in one go

Investment trust selector

Investment trusts offer access to a broad basket of shares held in one single investment. Use the investment trust selector tool below if you’re feeling confident and start exploring the range available.

If you’re new to investment trusts or just want to find out a bit more, scroll down for some help and information.

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  • Investment trusts selector

What’s an investment trust?

Investment trusts are set up like companies and you can invest in them on the stock exchange just like any other publically listed company. When you invest in an investment trust you will become a shareholder of that investment trust. What makes them stand out from other listed companies is that their business is solely to invest into other companies by buying their shares. So by investing into an investment trust you will be getting exposure to all the companies in which the investment trust has bought shares.

Investment trusts are similar to Unit Trusts and OEICs, collectively referred to as mutual funds in many ways but have some key structural differences. They both offer a ‘ready-made’ basket of shares which means you can invest in many different companies through a single investment in the mutual funds or investment trust. However, investment trusts are traded on an exchange, like shares, and they can ‘gear’, or borrow, money to invest whereas mutual funds cannot.

Find out more about Mutual Funds

Investment trusts do the hard work for you

An investment trust is a limited or public company. But unlike companies who sell goods or services, their business is purely to buy shares in other companies.

 

 

What’s the difference between an investment trust and a mutual fund?

Shared features

  • Made up of a basket of carefully considered individual shares
  • Run by investment experts who make the decisions for you
  • Both charge a fee for the investment manager’s services
  • Gives you simple access to a diversified pool of investments

Mutual funds

  • ‘Open-ended’ - if demand is high they can respond by creating additional units
  • The unit price is based on the value of the assets the fund holds, less any expenses and fees
  • Most funds are priced and traded only once a day at a certain time and are not traded on the stock exchange the same way a trust is
  • Can’t borrow to buy more shares when prices are perceived to be low

Investment trusts

  • ‘Closed-ended’ - there is a finite number of available shares to purchase, unlike Traditional Funds which are open-ended
  • The price can be at a discount or a premium to the value of the actual shares held, depending on investor appetite
  • Trades on the stock market, just like a stock or share
  • The investment trust can ’gear’ their investments to take advantage of low prices. This can make them riskier
  • The investment trust can retain part of their dividend income, from the companies they have invested in, each year – like a company would retain some of its profits.
  • This means it can then be passed onto the investor, via a dividend, on a potentially more consistent basis year by year.

 

How do I pick an investment trust?

Investors will typically look for an investment trust which is managed by someone with at least five years of experience. Some investment trusts are run by highly regarded managers with more than 20 years of experience which usually indicates an ability to manage investments and risk in every sort of market.

You may also want to invest for income. Some Investment Trusts pay out a 4-5% yield, or income, on an annual basis (although these amounts are not guaranteed).

Finally you may want to look at how any given investment trust has performed against its peer group, or its ‘benchmark’. Resist the urge to look at the last 12 months alone. Whilst past performance is not an indication to future performance you should typically look at the performance over at least a five year period.

Get started

You can invest in your chosen investment trust through any one of our three account options:

Dealing Account

Access a wide range of global investments in this flexible, unrestricted account.

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Stocks and Shares ISA

Take advantage of tax free investing with our Stocks and Shares ISA today.

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Self-Invested Personal Pension (SIPP)

From great value to best-in-class, access the SIPP to suit your needs through our extensive network of providers.

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I've still got questions!

We’re on hand to help at our Customer Experience Centre on 0345 0700 720