Investment Trust

Short Answer
An investment trust is a publicly traded closed-end fund that pools investors' money to invest in diversified portfolios of stocks or assets.

Investment Trust

Definition

An investment trust, also known as a closed-end fund, is a collective investment vehicle that pools capital from investors to invest in a diversified portfolio of assets, such as stocks, bonds, real estate, or private equity. Unlike mutual funds, investment trusts have a fixed number of shares traded on stock exchanges, and their market price may differ from the net asset value (NAV) of their underlying holdings. Investment trusts are managed by professional fund managers who aim to achieve capital growth and/or income for shareholders. They can use leverage to enhance returns but also carry risks, including market volatility and liquidity concerns. Investment trusts often distribute dividends to shareholders from the income generated by their investments.

Investment Trust

Examples

Equity Investment Trust:

  • A UK-based equity investment trust invests in a diversified portfolio of British and international stocks, aiming to provide capital appreciation and dividend income.
  • Real Estate Investment Trust (REIT):
    • A REIT investment trust pools investor funds to acquire and manage a portfolio of income-generating real estate properties, distributing rental income to shareholders.
  • Infrastructure Investment Trust:
    • An infrastructure investment trust invests in infrastructure projects such as toll roads, airports, or renewable energy assets, offering stable income and potential capital growth.

    • Investment Trust

    Further Reads

    Books:

    • "The Investment Trusts Handbook" by Jonathan Davis
      • A comprehensive guide to understanding investment trusts, including their structure, investment strategies, and performance analysis.
    • "Investment Trusts: A Complete Guide" by Max King
      • This book covers the history, benefits, and risks of investing in investment trusts, with insights into selecting and evaluating trusts.
  • Articles and Online Resources:
    • Investopedia: Investment Trust
      • An article explaining the basics of investment trusts, their characteristics, and how they differ from mutual funds and ETFs.
    • The Motley Fool: Introduction to Investment Trusts
      • A beginner-friendly guide to investment trusts, including their advantages, risks, and considerations for investors.
    • Financial Times: Investing in Investment Trusts
      • Articles on investment trust performance, trends, and regulatory developments impacting the industry.
  • Websites:
    • Association of Investment Companies (AIC)
      • The AIC provides information and resources on investment trusts, including performance data, news, and educational materials.
    • Morningstar: Investment Trusts
      • Morningstar offers analysis and ratings of investment trusts, helping investors evaluate performance and make informed decisions.
  • Research Papers and Reports:
    • "Performance Persistence in Investment Trusts" by the Financial Analysts Journal
      • A research paper examining the consistency of investment trust performance and factors influencing long-term returns.
    • "Investment Trusts: Opportunities and Challenges" by the International Monetary Fund (IMF)
      • This report discusses the role of investment trusts in global markets, their economic impact, and regulatory considerations.

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