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Guide to Investment Trusts:
An investment trust is a company in which shares can be bought, and which must be quoted on a Stock Exchange, usually the London. It is a 'pooled' investment, with many investors owning shares in the same trust. The investment trust makes its profits by investing in the shares of other companies rather than by manufacturing a product that it then sells. There are no specific investment restrictions for investment trusts, therefore some investments trusts are heavily invested in unquoted securities or the riskier emerging markets. An investment trust has a fixed issued share capital, which means that the number of shares allowed in an investment trust is fixed - it is a close-ended fund. The value of the shares in an investment trust is determined by stock market conditions, and the value may fall or rise and is not guaranteed. In addition to conventional investment trusts, which issue one class of share, there are also split capital investment trusts which issue two or more share classes. Each class of share is designed to appeal to different investors, offering varying combinations of income and/or capital growth.
Unit Trust or OEIC?
Unit Trusts and OEICs are both open ended collective investments and are subject to the same regulation. OEICs became available in May 1997 and were largely introduced as a more flexible and simplified alternative to the established industry of Unit Trusts.
UTs and ITs
Unit Trusts and Investment Trusts are not the same investment, although they are both collective investments whose value is dependent on the underlying assets the fund's money is invested in.
Split capital investment trusts
Splits are companies with a portfolio of investments just like conventional trusts, but they issue two or more different types of share.
Real Estate Investment Trusts
A real estate investment trust, or REIT, is a special type of company that can allow investor to acquire real estate in a tax efficient manner.
Investment trusts have several benefits for investors.
Allow you to pool your money -
Allow you to spread your risk -
Use professional managers’ expertise
May have low charges -
Allow you to invest small amounts.
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