Investment Trusts as a portfolio diversification strategy
7 May 2015
First developed in the nineteenth century, an investment trust is incorporated as a public company and listed on the London Stock Exchange. A type of collective or pooled investment fund, an investment trusts is a professionally managed fund which combines the money of a broad range of investors in a single investment vehicle. This pools costs and allows access to a wider range of investments than investors would generally be able to achieve individually. In short, investment trusts offer the advantage of a professional fund manager’s expertise and resources to help you achieve diversified access to the stockmarkets. But the diversification benefits of investment trusts don’t stop there.
“In addition to helping investors avoid the specific risks of investing in a single security, investment trusts also have the ability to invest in alternative asset classes, such as commercial property. For investors that have traditionally favoured stocks, bonds and cash, but in the low interest rate environment are seeking to diversify the asset mix within their portfolio, investment trusts could prove to be an interesting addition,” says Robin Stoakley, Head of UK Intermediary at Schroders
Investment trusts can also help you to achieve sector and geographical diversification, since each fund will have specific investment objectives that relate to a particular strategy, country, region, or industry. For example, while some investment trusts are global, others focus on specific regions such as the UK and Asia. According to Robin Stoakley, Head of UK Intermediary at Schroders, “one advantage that investment trusts offer is that they can be specialist, giving investors exposure to a particular asset or sector that they find difficult to access elsewhere, or too risky to invest in directly.” Of course, each sector and region carries its own investment risks and it’s important that investors consider these before investing.
Determining which fund is best suited to your needs will depend on the current composition of your portfolio, the level of risk you are prepared to take, as well as your investment objectives, goals and time horizon. So, if you are thinking about using investment trusts as part of a diversification strategy, speak to your financial adviser. If you do not currently have a Financial Adviser, you can find one near you by visiting www.unbiased.co.uk.
Please remember that the value of investments and the income from them may go down as well as up and you may not get back the amounts originally invested.
Schroders launched its first investment trust in 1924 and our range provides investors with access to a range of nine distinctive investment opportunities including: UK and Japanese equities, Pan-Asian equities and property.
To find out more, please visit www.schroders.co.uk/its
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 April 2015 by Schroder Unit Trusts Limited, 31 Gresham Street, London, EC2V 7QA. Registered Number 4191730 England. Authorised and regulated by the Financial Conduct Authority.
- Investment Trusts
Important Information: The views and opinions contained herein are those of Schroders’ Investment team, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds. This material is intended to be for information purposes only and 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. It 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 this document when taking individual investment and/or strategic decisions. Past performance is not a reliable indicator of future results. The value of an investment can go down as well as up and is not guaranteed. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Schroders has to its customers under any regulatory system. Regions/ sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. The opinions in this material include some forecasted views. We believe we are basing our expectations and beliefs on reasonable assumptions within the bounds of what we currently know. However, there is no guarantee than any forecasts or opinions will be realised. These views and opinions may change. UK: Schroder Investment Management Limited, 31 Gresham Street, London, EC2V 7QA, is authorised and regulated by the Financial Conduct Authority. For your security, communications may be taped or monitored. Further information about Schroders can be found at www.schroders.com US: Schroder Investment Management North America Inc. is an indirect wholly owned subsidiary of Schroders plc, a SEC registered investment adviser and is registered in Canada in the capacity of Portfolio Manager with the Securities Commission in Alberta, British Columbia, Manitoba, Nova Scotia, Ontario, Quebec and Saskatchewan providing asset management products and services to clients in Canada. 875 Third Avenue, New York, NY, 10022, (212) 641-3800. www.schroders.com/us