<p class=“MsoNormal“><a target=“_blank“ href=“https://maxiwyse.com/“ target=“_blank“>Investment trusts</a> have a long history, being
considered closed-ended investment vehicles that hold a specific number of
shares.</p><p class=“MsoNormal“>If you’re seeking a
portfolio with the right mix of assets, investment trusts can provide you with
that. Several investment trusts have proven their ability to drive dividend
growth for five decades, while others have time and again fared better than some
of the open-ended funds. </p><p class=“MsoNormal“>Investment Trusts
Explained</p><p class=“MsoNormal“>Investment trusts or
closed-end trusts are collective investments that pool investors’ money to hold
a diversified portfolio. They are usually publicly traded companies that aim to
turn a profit by buying other assets.</p><p class=“MsoNormal“>The number of
securities in a portfolio can vary with an investment trust. Sometimes, the
portfolio can have around 30 different assets, but it can also consist of
hundreds in one or more industries.</p><p class=“MsoNormal“>The ability to make
decisions related to the investments falls on the fund manager, who is also
tasked with ensuring that the trust’s investment goal is met.</p><p class=“MsoNormal“>Diving Deeper into
Investment Trusts</p><p class=“MsoNormal“>Investment trusts are
also called closed-end trusts because they put money into a specific number of
shares. They are quoted on the London Stock Exchange (LSE), allowing market
players to buy/sell shares at real-time prices, just like shares in regular
companies.</p><p class=“MsoNormal“>Fund managers have a
specific amount of investment dollars but can also borrow to make another
investment on top of the original one. Such a strategy is known as gearing,
which increases fund managers’ <a target=“_blank“ href=“https://maxiwyse.com/Registration“ target=“_blank“>potential
returns</a> as well as their potential losses.</p><p class=“MsoNormal“>Moreover, gearing is
not widely used in investment funds. In fact, many types of investment funds
are prohibited from using this method. One reason is that gearing would allow
funds to generate extra cash from investors if they’re open-ended.</p><p class=“MsoNormal“>Pros and Cons of
Investment Trusts</p><p class=“MsoNormal“>The pros of using
investments trusts are as follows:</p><p class=“MsoListParagraph“>· Diversification</p><p class=“MsoNormal“>As mentioned above,
investment trusts pool investors’ money so they can hold a diversified
portfolio which is usually ready-made and handled by experts. That saves
investors time and money that would have been otherwise spent on buying
individual shares in different companies.</p><p class=“MsoListParagraph“>· More Investment Options</p><p class=“MsoNormal“>Investment trusts have
access to a broader set of investments than funds since they can also invest in
unlisted assets, which may help amplify returns.</p><p class=“MsoListParagraph“>· Real-Time Trading</p><p class=“MsoNormal“>Unlike funds that are
forward priced, investment trusts allow Investors to buy/sell assets at live
prices and set stop loss orders to minimize their potential losses if the price
unexpectedly makes a sharp drop. </p><p class=“MsoListParagraph“>· Stable Income Source</p><p class=“MsoNormal“>Investment trusts are
an excellent option for investors looking for a reliable and stable source of
income. That’s because investment trusts can tap on reserves when the situation
in the market seems bleak.</p><p class=“MsoNormal“>Any investment is not
without risks. Here are the cons of using investment trusts:</p><p class=“MsoListParagraph“>· Gearing</p><p class=“MsoNormal“>Gearing is also a double-edged
sword that makes investment trusts more volatile than other funds. This
strategy can raise the returns but also increase the losses.</p><p class=“MsoListParagraph“>· Annual Management Fees</p><p class=“MsoNormal“>Investment trusts can
charge an annual management fee of 2% or higher, compared to active funds’ 0.5%
– 1% yearly fee. Such costs can be inconvenient as they can gradually reduce
the portfolio’s value.</p><p class=“MsoListParagraph“>· Valuation</p><p class=“MsoNormal“>While investment trusts
can access unlisted securities, the value of such assets may not be specific
and may only be determined quarterly. Therefore, relying on the net asset value
will not exactly help investors make a final decision.</p>
considered closed-ended investment vehicles that hold a specific number of
shares.</p><p class=“MsoNormal“>If you’re seeking a
portfolio with the right mix of assets, investment trusts can provide you with
that. Several investment trusts have proven their ability to drive dividend
growth for five decades, while others have time and again fared better than some
of the open-ended funds. </p><p class=“MsoNormal“>Investment Trusts
Explained</p><p class=“MsoNormal“>Investment trusts or
closed-end trusts are collective investments that pool investors’ money to hold
a diversified portfolio. They are usually publicly traded companies that aim to
turn a profit by buying other assets.</p><p class=“MsoNormal“>The number of
securities in a portfolio can vary with an investment trust. Sometimes, the
portfolio can have around 30 different assets, but it can also consist of
hundreds in one or more industries.</p><p class=“MsoNormal“>The ability to make
decisions related to the investments falls on the fund manager, who is also
tasked with ensuring that the trust’s investment goal is met.</p><p class=“MsoNormal“>Diving Deeper into
Investment Trusts</p><p class=“MsoNormal“>Investment trusts are
also called closed-end trusts because they put money into a specific number of
shares. They are quoted on the London Stock Exchange (LSE), allowing market
players to buy/sell shares at real-time prices, just like shares in regular
companies.</p><p class=“MsoNormal“>Fund managers have a
specific amount of investment dollars but can also borrow to make another
investment on top of the original one. Such a strategy is known as gearing,
which increases fund managers’ <a target=“_blank“ href=“https://maxiwyse.com/Registration“ target=“_blank“>potential
returns</a> as well as their potential losses.</p><p class=“MsoNormal“>Moreover, gearing is
not widely used in investment funds. In fact, many types of investment funds
are prohibited from using this method. One reason is that gearing would allow
funds to generate extra cash from investors if they’re open-ended.</p><p class=“MsoNormal“>Pros and Cons of
Investment Trusts</p><p class=“MsoNormal“>The pros of using
investments trusts are as follows:</p><p class=“MsoListParagraph“>· Diversification</p><p class=“MsoNormal“>As mentioned above,
investment trusts pool investors’ money so they can hold a diversified
portfolio which is usually ready-made and handled by experts. That saves
investors time and money that would have been otherwise spent on buying
individual shares in different companies.</p><p class=“MsoListParagraph“>· More Investment Options</p><p class=“MsoNormal“>Investment trusts have
access to a broader set of investments than funds since they can also invest in
unlisted assets, which may help amplify returns.</p><p class=“MsoListParagraph“>· Real-Time Trading</p><p class=“MsoNormal“>Unlike funds that are
forward priced, investment trusts allow Investors to buy/sell assets at live
prices and set stop loss orders to minimize their potential losses if the price
unexpectedly makes a sharp drop. </p><p class=“MsoListParagraph“>· Stable Income Source</p><p class=“MsoNormal“>Investment trusts are
an excellent option for investors looking for a reliable and stable source of
income. That’s because investment trusts can tap on reserves when the situation
in the market seems bleak.</p><p class=“MsoNormal“>Any investment is not
without risks. Here are the cons of using investment trusts:</p><p class=“MsoListParagraph“>· Gearing</p><p class=“MsoNormal“>Gearing is also a double-edged
sword that makes investment trusts more volatile than other funds. This
strategy can raise the returns but also increase the losses.</p><p class=“MsoListParagraph“>· Annual Management Fees</p><p class=“MsoNormal“>Investment trusts can
charge an annual management fee of 2% or higher, compared to active funds’ 0.5%
– 1% yearly fee. Such costs can be inconvenient as they can gradually reduce
the portfolio’s value.</p><p class=“MsoListParagraph“>· Valuation</p><p class=“MsoNormal“>While investment trusts
can access unlisted securities, the value of such assets may not be specific
and may only be determined quarterly. Therefore, relying on the net asset value
will not exactly help investors make a final decision.</p>
This article was written by ForexLive at forexlive.com.