About investment trusts
An investment trust is a public limited company, with shares listed on the London Stock Exchange. They invest in the shares of other companies, in the UK or overseas.
Investment trusts are known as 'collective investment vehicles' because they pool investors' money, spreading the risk of stockmarket investment. Their objectives vary, but most investment trusts invest for income or growth, or a combination of the two.
An investment trust has a board of directors to represent the interests of shareholders. And like any other company, it holds an annual general meeting at which shareholders can vote. The board appoints a professional investment manager to manage the assets of the trust. In the case of Martin Currie Global Portfolio, this is Martin Currie.
How do they work?
What you get from investment trusts is full-time, cost-effective, professional management of your money. Because they are pooled investment vehicles, they represent large numbers of investors, investing together in a whole range of different shares. So you spread your risk. Your money is never at the mercy of a sudden drop in one company's share price.
The costs of investing in an investment trust tend to be low, especially compared with the cost of other collective investments or running your own portfolio. When you invest in an investment trust you are buying the shares of the investment trust itself and not the shares of the other companies in which it invests. The share price at which you buy does not necessarily reflect the underlying value of the assets in the trust. This is because the price is dictated by market demand, and not the value of the trust's share portfolio. Depending on market conditions and market sentiment, the spread between the purchase and sale price can be wide.
By their nature, stockmarkets and share prices fluctuate. That is why an investment trust's share price is rarely the same as its net asset value per share. When the share price is below the net asset value it is trading at a discount. Share prices above the net asset value are at a premium. Discounts and premiums will vary but when we show the effect of charges and expenses on your investment, we have assumed the discount/premium is constant.
See our glossary of terms for more information.