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    • Home • Advice • Common questions

    Will I have to pay a hefty premium if I invest large amounts in Investment Trusts?

    28 February 2024

    Question by Boring Money Reader

    Hi, I have always been put off investing in investment trusts because of the belief that if I wanted to invest a large amount in one go, as I do now in mutual funds, then because I am investing a large amount I would expect to pay a hefty premium to that day's bid/offer spread. Is this correct?

    Answered by Annabel​​​​ Brodie‑Smith

    Most private investors are not investing large sums and it’s easy to trade without any impact on the share price. However, if you are investing larger amounts, it’s well worth looking at the trading data on the AIC website. Each member investment trust has a profile page and on the overview tab, you can see how many shares are traded and the value of those shares for yesterday, as well as average daily trading values over the past month and the past year.

    The general rule is that larger investment trusts have more trading activity and the value of shares traded is greater. So for example, a large Global trust might see £2 million to £3 million of its shares traded in a day, but a much smaller UK Smaller Companies investment trust might see only a small six-figure sum traded. If the amount of shares your reader is looking to buy makes up more than a few percent of the average daily trading value, it might be sensible to split the trade over a number of days.

    You can access the profile pages of every AIC member trust on our website by visiting Compare investment companies. As an example, have a look at the overview page of F&C investment trust which shows the trust’s trading data towards the bottom of the page.

    Kind regards

    Annabel​​​​ Brodie‑Smith

    Communications Director

    Answered by

    Annabel​​​​ Brodie‑Smith

    Communications Director, AIC

    Important stuffHolly and the team have worked in the finance industry for many years but we are not regulated to give you personal financial advice. For every story on this website about a good investment, or something which went up by 10% or made someone £200, we could also share a story about a bad investment, something which fell in value or lost someone £200. We aim to provide general information and pointers – and btw we are totally agnostic about which providers you might pick – but if you have complex affairs, want personalised advice or need specific recommendations, please look at advice pages and see if regulated digital or traditional financial advice would be the best solution for your needs. Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
    Risk warningAs is always the case with investing, your capital is at risk. The value of your portfolio can go down as well as up and you may get back less than you invest. Tax treatment depends on your individual circumstances and may change in the future.
    Boring Money Ltd is a limited company registered in England and Wales under registration number 09459832 and we have our registered office at 10 Lower Thames Street, London, England, EC3R 6AF.
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