Investment Trusts - Introduction
Overview
They are a collective investment that pools the money of investors, spreading it across a diversified portfolio of stocks and shares that are selected and managed by professional investment managers. Investment trusts issue a fixed number of shares, for this reason they are described as closed-ended funds. The shares of investment trusts are traded on the London Stock Exchange.
Investment trusts are more volatile than their open ended OEICs and Unit Trust counterparts – this is because Investment trusts are closed ended and are able to highly leverage their portfolio through unrestricted borrowing.
Question - Use Your Note Taker To Jot Down Ideas / Calculations
1. When more units or shares can be created on demand, this describes the features of:
a) OEICs and Unit Trusts.
b) OEICs only.
c) OEICs and Investment Trusts.
d) Unit Trusts and Investment Trusts.
A)
OEICs and Unit Trusts are both open ended meaning shares can be created on demand. Investment
trusts are close ended meaning there are a set number of shares.
- Further study text reading: Pages 217-225