Investment trusts

Wednesday, 22 November 2006 03:34

Investment trusts are companies quoted on the London Stock Exchange whose sole purpose is to manage the investments they own.

Typically an investment trust owns a fixed number of shares.

Investors can then buy shares in an investment trust, and benefit from increases in the value of the company and dividends from the shares it owns.

Effectively, buying shares in an investment trust means buying exposure to potentially hundreds of different shares.

As a trading investment company, investment trusts can borrow to provide gearing to buy more shares, invest in a wide range of securities, both listed and unlisted, and hedge risks.

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