July 25, 2014

Investment Trusts Explained

An investment trust is classed as a public limited company (PLC). Just as with a regular PLC company, investors can buy shares within an investment trust. The premise is that money is raised for a trust which is then invested. If the investments within the trust do well, then she share price increases.  In contrast if the investments perform badly, then the share price decreases. Simply put, investment trusts act as companies that invest in companies. Many investment trusts focus on a particular region, for example “China” and “Emerging Markets”.

In similar fashion to a PLC, an investment trust is owned by its shareholders. A key difference between unit trusts and OEICs is that there is a fixed amount of shares in issue. Many investment trusts are amongst the largest companies in the United Kingdom. For example, there are a variety of investment companies within the FTSE 250. These include specialist trusts such as the F&C commercial property trust to ones which focus on a specific region such as the JP Morgan American investment trust.