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Investment trust |
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Investment trustA company quoted on the London Stock Exchange which invests its shareholders' funds in the shares of other companies.Points to note about investment trusts are:They enable private investors with limited funds to get diversified share ownership and without incurring heavy dealing costs.They enable investors to get exposure to markets that they may not be able to reach themselves (e.g. to emerging countries). Different trusts also have differing objectives (e.g. growth or income).They enable investors who don't have the skill or inclination to invest directly in companies to get the advantage of professional fund management (although see point below 6)It is easy for investors to drip-feed money into investment trusts over time by using a monthly savings plans.Unlike unit trusts, investment trusts are closed end funds. That is, there is a fixed number of shares in circulation, and the price of those shares is determined like other quoted shares - by supply and demand. This means that IT shares often trade at a discount to their Net Asset value (i.e. the value of their underlying investments) and it also makes IT shares more volatile than unit trust prices.ITs are actively managed funds which try to produce total returns better than the market average. However once management charges are taken into account, they often fail to meet this target. Hence the move by many investors to passive funds - trackers and index funds - which have lower charges.Similar MatchesMultilateral Investment Guarantee Agency (MIGA)Multilateral Investment Guarantee Agency (MIGA)Agency established by the World Bank that offers various forms of political risk insurance to corporations. Undertakings for Collective Investment in Tradable SecuritiesUndertakings for Collective Investment in Tradable SecuritiesUCITs are collective funds which can be sold across national borders within the EU in accordance with the 'Undertakings for Collective Investment in Tradable Securities' Directive. For UK investors, one of their significance attributes is they can be sheltered from tax within the Stocks and Shares component of an ISA. Investment Valuation Model (IVM)Investment Valuation Model (IVM)The basic mathematical technique of finance that calculates the value of an investment as the present value of all future cash flows expected to be generated by the investment. Personal Investment AuthorityPersonal Investment AuthorityA Self Regulating Organisation (SRO) authorised by the Financial Services Authority (FSA) which regulates the majority of companies conducting investment business with private investors in the financial services market.The PIA replaced FIMBRA and LAUTRO and some activities of IMRO and the SFA in 1994.All regulatory functions of the PIA were taken over by the Financial Services Authority (FSA) in December 2001. Direct Foreign InvestmentDirect Foreign InvestmentSee Foreign Direct Investment Further SuggestionsShort term investment servicesNormal investment practice Investment Company Institute (ICI) approved investment trust Monthly investment plan investment company Overinvestment Income investment company Investment manager Trade-related investment measure Investment Management Regulatory Organisation real estate investment trust Investment opportunity set Expected return on investment investment local authority investment Tradepoint Investment Exchange Ethical Investment Research Service Investment Company Act of 1940 alternative investment Investment club Systematic investment plan Target investment mix Passive investment strategy Association of Investment Trust Companies |
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