Investment Trusts: How to pick a good one
23 Jan, 2025
Key Facts
- Total Assets: £267bn
- First Trust Established: 1868
- Unique Feature: Can smooth and reserve dividends
- Investment Sectors: Global equities, property, infrastructure, smaller companies
What Are Investment Trusts?
Investment trusts are listed companies that invest in other companies, offering a unique approach to building a diversified investment portfolio. Unlike standard funds, they provide distinctive advantages like income smoothing and the ability to use gearing to potentially boost returns.
Core Advantages
- Diversification: Access multiple companies through a single investment
- Dividend Flexibility: Can reserve up to 15% of dividends for lean years
- Active Management: Professional managers selecting investments
- Potential for Consistent Income: Some trusts have 50+ years of growing dividends
Beginner-Friendly Options
Top recommended starting investment trusts:
- Henderson International Income
- Alliance Witan
- Scottish American
- F&C Investment Trust
Key Differences from Index Trackers
- Index Tracker: Passive, tracks market average
- Investment Trust: Active management, strategic stock selection
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✓ Detailed trust performance analysis ✓ Comprehensive dividend strategy guide ✓ Expert trust selection criteria ✓ Risk management techniques ✓ Comparative trust performance tools ✓ Income investment strategies
