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Investment Trusts

Investment trusts are listed companies that invest in the shares of other companies or fixed income securities, unquoted securities or property. As a listed company its shares are quoted on the London Stock Exchange and the share price is determined by demand and supply. Some of the main benefits of investing in Investment Trusts are:

What is an Investment Trust

New to Investment Trusts? Find out more.

Medium to long term investment

Invest via your Trading Account, ISA and SIPP

Invest with TD from as little as £5.95 (for active traders)

Lower risk option than shares

Generate dividend income and benefit from tax advantages

Choose from over 700 Investment Trusts with TD

Investment Trust Quickrank Tool

Use this easy to navigate tool to find information, performance data and statistics about Investment Trusts.

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Key features and terms

When you purchase a share in an investment trust you are buying ‘an interest’ in all of the companies that the investment trust is invested in. This is known as the net asset value (or NAV), normally expressed as a 'per share' figure.

The NAV per share is equal to the Net Assets / Number of shares in issue..

A premium is where the share price is above the NAV (the cost to purchase shares is above what the underlying investment is really worth)

A discount is where the share price is below the NAV (shares are cheaper than their net worth).This feature can increase the risk profile of investment trusts.

The dividend income will rise and fall in line performance of the shares which the investment trust owns and market forces.

A main tax advantage to an investment trust is that it can buy and sell shares in companies without incurring capital gains tax (you may incur a capital gains tax when selling the investment trust itself).

Some investment trust managers may use gearing to invest in good opportunities. Simply put, gearing means borrowing more money in addition to investors’ money.This can magnify gains when the manager makes the correct decisions, but can exacerbate losses if they get it wrong.

In most cases there will also be an Ongoing Charge payable to the Investment Trust Manager.

It may sometimes be difficult to sell an Investment Trust and access the capital invested in the short term. Before investing you should read the Prospectus for full details of the risks.

Difference from Funds Pie charts

Investment trusts are close-ended companies. This means they have a fixed number of shares in issue, unlike Funds that are open-ended investment companies ('OEICs') or Unit Trusts. Investment Trusts are also listed companies and must have an independent board of directors that are obliged to answer to their shareholders.

Understanding the risks

The value of your investments and the income derived from them may go down as well as up. You may not get back all the money that you invest.

A percentage of the value of your investment may be charged by the Investment Trust provider. To view these charges (Ongoing Charges), please refer to the Investment Trust Quickrank.

Find out more


Top 3 TD customers' UK Buys and Sells

Week commencing Monday 13th April 2015

  Top 3 Buys Top 3 Sells
1 Lloyds Banking Group PLC - LLOY Lloyds Banking Group PLC - LLOY
2 UK Oil & Gas Investments PLC - UKOG Barclays PLC - BARC
3 Tesco PLC - TSCO Tullow Oil PLC - TLW
See all Top Buys and Sells

The Top Ten Buys and Sells should not be taken as a recommendation to buy or sell any particular bond or stock, and it is not intended to offer any form of advice. Instead it is simply an indication of the general buying and selling trends amongst some TD customers, observed during the period stated.

Things to know before you apply

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Before you open an account with us you will be asked to confirm that you have read our terms of service.
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We offer our services on an execution-only basis, which means we don’t provide investment advice . If you are in any doubt about the suitability of the products and services being promoted you should speak to an investment adviser.

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Things to know before you apply

Risk icon

Risks

All trades carry a varying degree of risk and it's important you understand the nature of risk. The value of your investments may go down as well as up. You may not get back all the money that you invest.
Learn more

money icon

Your money and investments

It's important to understand how your money and investments will be held.
Learn more

conflicts of interest icon

Conflicts of interest

We have a conflicts of interest policy that identifies circumstances that constitute, or may give rise to, conflicts of interest which pose material risk of damage to one or more of our customers.
Learn more

terms of service icon

Terms of service

Before you open an account with us you will be asked to confirm that you have read our terms of service.
Learn more

We offer our services on an execution-only basis, which means we don’t provide investment advice . If you are in any doubt about the suitability of the products and services being promoted you should speak to an investment adviser.

Agree, start my application Retrieve my application