Investment Trusts Explained: A Comprehensive Guide

An investment trust is a group investment, often found in the United Kingdom. The trust contains a number of investors, and is itself a public limited company, which is somewhat like a limited liability company, and is used for the same purpose by those running the trust. The investment trust can be managed by one person, or by a group of investors.

How Does the Investment Trust Work?

The investors pool their finances, and this money is then used to create a number of shares. The shares are then floated into the stock market, so that investors, or others, can purchase these shares. They may be floated slightly under their current value, giving them more selling power, or the manager of the investment trust can borrow capital in order to create more shares, known as Gearing Up.

Where Can Investment Trusts be Found

If you can find a stock broker to manage them within the United States, then you should be able to purchase them directly from the broker. If this is not possible, then you might consider using a savings scheme to purchase the shares. Up to around $8000 can be invested in a trust, if the company is in the UK. If it is in the US, or in other parts of the world, then the limit may be as little as $2000.