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Investment trust

Investment trust Definition

Investment trusts are companies that invest in the shares of other companies.

They pool investors' money and generally delegate to a professional fund manager to invest in the shares of a wider range of companies than most people could practically invest in themselves. The investment trust often has no employees, only a board of directors comprising only non-executive directors.

Investment trusts are traded on stock exchanges like other public companies. The share price does not always reflect the underlying value of the share portfolio held by the investment trust. In such cases, the investment trust is referred to as trading at a discount (or premium) to NAV (net asset value).

The investment trust sector, in particular split capital investment trusts have suffered somewhat over the last few years.

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