An investment trust is a company which invests in the shares of other companies. When you invest in an investment trust you are putting your "trust" in that company to wisely invest your money in other companies. These are actively managed funds, meaning that there is a management team that is constantly evaluating and monitoring the funds' performance and they're changing the investment strategy in hopes of maximizing the return on investment. This differers from "passive funds" where investments are made mostly automatically to try and track or trend against an index fund.
When evaluating investment trusts it is important to examine the following:
- How has the investment trust done historically? How has their growth compared to other funds that you are considering?
- What is the investment trust's strategy? What types of companies are they investing in and does their strategy meet you goals, objectives and investment philosophies?
- Who is the management team? What are their credentials and do they inspire confidence? Do you believe that they will wisely invest you money?
You are giving your money over to a company and trusting them to wisely invest your money so it is important to do your research, and make sure you find the firm that is right for you. Ultimately you want to find the team that you believe will do a better job investing your money than you could do yourself (either because of greater expertise or more available time to focus on the trust).
If you'd like to discuss the possibility of investing in an investment trust, fill out our short form, and one of the specialists here at SimplyFinance will put you in touch with an investment advisor who will be able to answer all your questions about investment trusts. If you decide that an investment trust is right for you, the same investment advisor will search the market for the investment trust that best suits your financial goals and circumstances.