How investment trusts can bring balance to a portfolio

There can often be advantages to investing in a fund rather than choosing to hold individual company shares. One of the options is to hold an investment trust.

This type of fund has existed for more than a century and remains popular with investors. Investment trusts are companies that issue shares and are run by investment managers, and are listed on the stock market. The manager combines the money it receives from shareholders and uses it to buy a variety of shares and assets. This is known as a pooled investment. The nature of the holdings will depend on the purpose for which the trust was set up. This could be for a specific country or a sector of the market, such as technology.

The total of the holdings is known as the net asset value. The price of the shares will differ from the net asset value.

There are some important differences between an investment trust and other forms of pooled investment. Among the advantages is the likelihood of charges being lower. That should have a favourable impact on returns, as more of the fund will be invested.

Historically, investment trusts have performed well compared with many other types of pooled funds, and they often form an important part of a balanced investment portfolio. If you’re interested in knowing more about how investment trusts can play a role in any financial planning, Chester or Shropshire residents can give us a call at Hartey Wealth Management.

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