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Investment Trusts

Our advisors take an industry specific, consultative approach to provide your organization with customized trust and investment solutions. From liquidity management to retirement services to business holding escrows, we offer a complete array of programs for successful entrepreneurs, corporations and municipal agencies.

Highly regarded for their innovative ideas and responsive one-on-one service, our trust and investment professionals can help you with even the most complex investment management issues.

What is an investment trust?

An investment trust is a public listed company. It’s designed to generate profits for its shareholders by investing in the shares of other companies.

Shares in investment trusts are traded on the London Stock Exchange so investors can buy and sell from the market, rather than dealing with a fund management company.

What makes investment trusts different?

Here are some of the features that make them different from other investments:

  • Closed-ended - an investment trust has a fixed number of shares. The fund manager can invest and sell assets when they feel the time is right; not when investors join or leave a fund. It also means the underlying capital investment base is relatively stable.
  • Borrowing powers - investment trusts can borrow money (known as gearing) to take advantage of investment opportunities. Borrowing can increase the returns for shareholders, but if the assets fall in value, it can also increase the potential for losses.
  • Income - investment trusts can retain up to 15% of their income in any year. This can be used to supplement income in future years.
  • Competitive pricing - investment trusts usually have smaller operating costs than OEICs (Open Ended Investment Companies) so their charges are generally lower.
  • Governance - every investment trust has an independent board of directors. They’re responsible for safeguarding shareholder interests.
  • Shareholder rights - when you invest in an investment trust you become a shareholder in that company. This gives you the right to vote on issues such as the appointment of directors or changes to the investment policy.

How much is it worth?

  • The combined value of all the assets the trust holds – that’s Net Asset Value (NAV).
  • Unlike other investment funds, shares in an investment trust can be bought and sold at a price that is higher or lower than NAV. So it’s possible to buy shares in an investment trust at a lower price than the value of the underlying assets.
  • It all comes down to market demand. If the share price is lower than the NAV the shares are said to be trading at a discount. However, when the share price is higher than the NAV, the shares are trading at a premium.