Investment Trusts
An investment trust is a collective investment fund which pools together money from hundreds or thousands of investors. This pool of money is structured as a company with shares quoted on the stock exchange.
A professional fund manager is employed to invest the funds in the shares of a wider range of companies than most people could practically invest in themselves. There are more than 300 investment trusts responsible for the management of billions of pounds' worth of assets on behalf of investors.
As a quoted company, an investment trust is a 'closed ended' fund with a fixed number of shares in issue. Conventional investment trusts issue only one class of ordinary share. These usually give shareholders a right to dividend distributions and offer the opportunity of capital growth to increase the value of their investment.
Some investment trusts are structured to offer high income while others focus on growth or a mix of growth and income. Some specialise in certain countries or regions. Others target specific industry sectors .The price you pay for shares in an investment trust will vary, depending on how popular the trust is. Too few buyers will mean the share price will drop however well the individual holdings of the trust are doing.