Investment Trusts are companies that buy and sell shares in other companies.
When you invest in an investment trust company, you become a shareholder of that company. Your shares will rise and fall in value according to supply and demand for the shares.
Investment trusts enable you to spread risk by investing in numerous other companies - without the hassle of having to buy, monitor and sell shares individually.
Investment Trusts and Shares
You can have shares in as many different trusts as you like.
The investor is taxed as for any other share - Dividends are received with a tax credit of 10%. Non-taxpayers cannot reclaim this tax. Lower rate and basic rate tax payers have no further liability. Higher rate taxpayers are liable to a further 22.5% on the grossed up dividend.
Charges include a bid/offer spread of around 5% for buying and selling shares and a management charge of between 0.3% and 0.5% per annum. The overall charges of an investment trust are generally cheaper than a unit trust.
These are intended as a medium to long term investment.
You are not certain to make a profit, you may lose money / make a loss.
Level and bases of, and reliefs from taxation are subject to change.