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An investment trust is a public listed company. It’s designed to generate profits for its shareholders by investing in the shares of other companies.
Investment trusts, like unit trusts and OEICs, let you to pool your money with that of other investors to get exposure to a range of assets through a single investment.
This diversity means you can spread risk by investing in tens or even hundreds of companies through one investment - but this doesn't mean there is no risk to your capital, and the risks will vary depending on where the trust invests.
Investment trusts are set up as companies and traded on the London Stock Exchange. As with any company quoted on the stock market, investment trusts have to publish an annual report and audited accounts. They also have a board of directors to which the manager of the trust is accountable. When you invest in an investment trust, you become a shareholder in that company.
The underlying investments in an investment trust could be from a wide range, including equities, fixed interest investments and property.
The investment strategy and underlying funds determine how risky the investment is.
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