Investment Trusts

10 Reasons to choose Investment Trusts

16 August 2016

1. Investors are shareholders

 

Investment trusts aim to generate superior returns for their shareholders through investing in underlying assets – from equities to direct property investments – so they have the shareholders’ best interests at heart.

  

2. Small investment sums

 

 

For a relatively small amount of money you can own a stake in large companies and properties. Investment trusts are collective investment funds, so they pool cash from many investors to buy a diverse portfolio of sizeable assets.

   

3. Purchasing power  

 

An investment trust pays a fraction of the dealing costs of the private investor. It can negotiate prices it pays to buy or sell a spread of equities and other assets.

4. Risk management  

 

As investment trusts spread your cash across assets, they also spread your risk.

5. Easy to track  

 

Investment trusts are transparent. You can see where your funds are invested through regular updates from the fund managers and you can track performance daily on the stockmarket.

6. Investor protection  

 

Despite their name, investment trusts aren’t trusts – they are limited liability companies with ordinary shares listed on the London stock exchange. They are required to produce regular financial reports and follow rules.

7. Invest in the best  

 

Investment trusts are closed-ended, unlike unit trusts, which means that they do not need to sell quality assets in order to pay out investors who wish to exit the fund. This means the fund can hold its best-performing assets to the benefit of investors.

8. Easy to buy and sell  

 

As investment trusts trade on the stock exchange, they are liquid like other publicly traded shares – so investors can buy and sell at times that best suit their investment objectives.

9. Gearing advantage  

 

Unlike collective investments such as unit trusts, investment trusts can gear through borrowing money. This means the fund manager has easier access to capital to invest in promising assets.

10. Smoothing dividends  

 

Investment trusts can smooth income, holding back some dividends in good years to pay out at times when underlying holdings cut dividends.

 

Important Information 
This article is intended to be for information purposes only and it is not intended as promotional material in any respect.  The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Schroders has expressed its own views and opinions in this document and these may change.  The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

Past performance is not a guide to future performance. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested.  Exchange rate changes may cause the value of any overseas investments to rise or fall.

Issued in August 2016 by Schroder Unit Trusts Limited, 31 Gresham Street, London, EC2V 7QA. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority. UK10748

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