What is an investment trust?
An investment trust is an actively managed fund, with a fund manager investing in a portfolio of shares, property or other assets according to the objectives of the fund.
Investment trusts can provide an excellent opportunity for portfolio diversification across geographical areas and market sectors, as well as more niche opportunities like private equity.
Benefits of investment trusts
Many investment trusts pay steady dividends due to their ability to hold back up to 15% of the income generated every year, to help top up income payments in leaner years.
Investment trusts are overseen by a board of directors, which ensures that the fund is managed in line with shareholders’ interests.
You have access to a wide range of assets with just one investment.
Over the long term, investment trusts tend to outperform other funds.
Investment trusts are allowed to borrow to invest (gearing), which can increase gains.
What to consider when investing in investment trusts
Investment trusts tend to be more expensive than ETFs, to account for the research and management costs.
Not being in charge
You can potentially lose some of your money if the fund manager doesn’t make the right choices.
Gearing can bring a positive outcome; however, it becomes a risk if the borrowed money is not invested wisely.
Like all funds, investment trusts can rise and fall in value. However, they can be more volatile than other assets due to supply and demand.
Most purchased investment trusts
The below table highlights the top ten investment trusts on Freetrade in 2021 by number of orders.
Data updated on the 27th May 2022. When you invest, your capital is at risk.
List of investment trusts on Freetrade
What can I invest in?
See which are the most traded shares by the total value of buy orders over the past week on the Freetrade app.
US and UK stocks
Invest in thousands of NYSE, NASDAQ and London Stock Exchange-listed companies across many sectors such as tech, energy, consumer staples or healthcare.
Choose from a wide range of exchange-traded funds covering index funds, stock and bond ETFs from providers like Vanguard, iShares and Invesco, as well as HSBC and Xtrackers.
Diversify your investments with REITs, which allow you to add residential or commercial real estate assets to your portfolio without the hassle of buying and managing the properties yourself.
Choose from over 150 investment trusts to diversify your portfolio across a wide range of sectors, geographical areas and markets worldwide.