What is an investment trust?
Investment trusts explained.
Pacific Assets Trust is an investment trust that aims to achieve long-term capital growth for investors.
But what is an investment trust?
Investment trusts have been around for over 150 years. They offer a simple way of accessing a portfolio of investments without having to choose and manage all the different investments yourself.
When you invest, your money is pooled with funds from other investors. A professional investment management team then creates an investment portfolio by investing in the shares of a range of different companies.
What are the benefits of an investment trust?
Diversified portfolio
Access to a diversified portfolio of shares, which can be less risky than investing in the shares of just one company as it spreads the risk across different investments.
Longer-term view
In contrast to ‘open-ended’ funds, investment trusts are ‘closed-ended’. This means that they have a fixed number of shares, so investment managers won’t be forced to sell assets within the portfolio when investors redeem their shares, which allows them to take a longer-term view.
Investment expertise
Professional investment managers select the shares that an investment trust owns and manages the portfolio so that individual investors don’t have to.
Easy to invest
Investment trusts are relatively easy for individuals to invest in directly and are available through many investment platforms.
Who can invest?
What are the risks?
As with any investment, it is important to consider the risks when buying shares in an investment trust. The value of investments can fluctuate, and investors may get back less than they originally invested. Also, since investment trusts are traded on the stockmarket, their share prices can be influenced by market sentiment and experience volatility.
Investment trusts can borrow money to invest, a practice known as gearing. This has the potential to enhance returns when markets are going up, but gearing can also magnify losses when markets are falling.
Every investment trust’s investment strategy, approach and portfolio composition can vary. Investors should always carefully review the trust’s prospectus and consider seeking professional advice to understand the investment objectives, risks and potential returns before making investment decisions.
If you'd like to seek financial advice, you can find an independent financial adviser at unbiased.co.uk. You may be charged for any advice you receive.
How to invest
There are different ways to buy shares in an investment trust.
