Investment Trusts

Investment trusts continue to be a traditional method of investing where the trust will hold a large range of holdings to spread the risk. Exposure to many asset classes are available including equity and fixed income and specialist sectors like biotechnology and healthcare. 

Advantages of Investment Trust

  • Increased diversification
  • Lower volatility than single stock holdings
  • Exposure to world class fund managers with historic track records
  • Potential to buy at a discount Net Asset Value (NAV)
  • Many investments trusts borrow (gearing) to boost returns  

Disadvantages of Investment Trusts

  • Some use gearing; this can potentially increase returns but also losses
  • Popular holdings can incur a premium to Net Asset Value (NAV)
  • Internal management fees could apply