Investment trusts

An investment trust is a company whose business is to invest in other companies. It holds a portfolio of investments in the same way as a unit trust and is professionally managed by a fund manager. But instead of buying fund units from a private company, you invest by buying shares in the same way that you would in any publicly quoted company.

When valuing the shares of an investment trust, look at the value of all of its investments, subtract any liabilities such as debt taken out to leverage returns, and divide that figure by the number of shares. Generally, shares in an investment trust trade at a slight discount to their net asset value.

• See Tim Bennett’s video tutorial: Investing in funds – why we prefer investment trusts.

Merryn

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