The managers of investment trusts also manage a diversified portfolio of shares but unlike unit trusts, where the underlying investments are held in trust for the investors and the unit price reflects the value of the portfolio divided by the number of units in issue, the Investment Trust issues a fixed number of shares in the company and those shares are traded on the stock market. The shares can, therefore, trade at either a discount or a premium to the value of the underlying investments. It is also possible for the investment trust to issue different classes of shares so they should be regarded as more complex investments that carry a higher degree of risk compared to unit trusts.
Posted in: Investments
