Seven reasons to buy investment trusts

Most ordinary investors put their money into unit trusts or open-ended funds (OEICs). But the financial insiders go for a different kind of fund: investment trusts. Sandy Cross explains why you should too.

Most financial industry insiders don't invest in the things you do. The majority of ordinary investors put their money as instructed by their independent financial advisers (IFAs), their pension managers and the press into unit trusts or open-ended funds (OEICs). The financial cognoscenti go instead for a different kind of fund: investment trusts. They do so for two simple reasons.

First, investment trusts tend to cost less than unit trusts. Second, they tend to perform better. An investment trust is a listed company whose business is to make investments in financial assets. That usually means shares in other listed companies, but investment trusts also invest in assets as diverse as private equity, infrastructure, property and hedge funds. As with any other listed company, an investment trust has a board. That board appoints a manager to run the firm's investments.

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