Why Investment Trusts?

1.2 What are the benefits of investment trusts?

Investment trusts are often known as the City’s best-kept secret. When investors discover them, they often say they wish they’d known about them before...

Investment trusts offer many benefits for savvy first-time and experienced investors, especially in the long term.

They are easy to buy and sell, and cover every major market – whether you favour a cautious or more adventurous approach to investing.

Here’s why they have such wide appeal.

 

Choice

Our trusts allow you to choose the markets you invest in.

You may wish to build a global portfolio with stakes in the world’s biggest economies. Or you may want to focus on the UK stock market, the US, Far East or Europe.

There’s also the chance to make the most of our strength and experience in China and Russia.

Speciality

Investment trusts can have a wide remit or specialise in countries or sectors. You can focus on growth, income or a mixture.

Flexibility

If you’re just starting to invest, you could consider a general trust with a good spread.

If you’ve already begun, investment trusts are a useful way into specialist markets or industries.

Whatever your experience, you can benefit from the research and knowledge of J.P. Morgan Asset Management specialists.

Liquidity

Investment trusts are simple to buy and sell. They are traded on the stock market like shares. When a trust wants to expand, it issues shares to raise money from shareholders and invests the funds.

Cost

Trusts tend to be cheaper than other pooled investments such as OEICs and unit trusts. This is because they are traded like shares.

Stability

A single company’s fortunes ebb and flow with market conditions. A diversified trust aims to avoid any sudden economic shocks.

Long term

The value of investment trusts can rise and fall, and you might not get back the money you put in. But they’re spread across a range of companies. If one company isn’t doing well, it is only a small part of the portfolio and therefore may have a lesser effect on overall performance.

Diversification

An individual investor would find it hard to build a portfolio of upwards of 20 companies unless they had a large sum to invest.

Shareholders in investment trusts get all the spread of different companies with minimum overheads and time. 

Diversification does not guarantee investment returns and does not eliminate the risk of loss, however it does help reduce the overall risk of the portfolio.

What is an investment trust and how does it work? Previous Chapter 1.1 1.1
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What is the difference between an investment trust and a fund? Next Chapter 1.3 1.3
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Please read this important information

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