What is an Investment Trust?
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.
Buying Investment Trusts with TD Direct Investing
Buy and sell Investment Trusts in your Trading Account, ISA and SIPP
Trade at our lowest share dealing rate in your first 3 months. See our rates & charges page. After the 3 months we’ll move you onto our Active, Frequent or Standard rate depending on how often you trade
Our dividend reinvestment service is available for a range of Investment Trusts, making it easy to build up the value of your holdings by automatically purchasing more shares in the investment trusts you hold for just £1.50 commission
Gradually build up your holdings by setting up a regular investment from as little as £25 per month and avoid having to time the market and decide when's the best time to buy
Use our Quickrank Tool to find information, performance data and statistics about any of our 600+ Investment Trusts
- 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.
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. The tax treatment of these products depends on the individual circumstances of each customer and may be subject to changes in future.
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 Search Tool.
Which TD Direct Investing account do I need?
You can invest in Investment Trusts with an ISA, TD SIPP or Trading Account.See which account is right for you