Funds or Trusts?

rickypatel89

Hi,

I'm looking to diversify my portfolio by using Investment Funds or Trusts. But I'm not sure which is the best to use. I'm leaning towards Trusts as there is no annual management charge, correct?

The trusts which I'm looking at are: JPM Emerging Market, Standard Life Smaller UK Companies and Murray International Trust.

Thanks

dunstonh

Your terminology is a little mixed up. When you say investment funds you could mean many things. Equally, Trusts could be unit trusts or investment trusts or life funds under trust.

Linton

rickypatel89 wrote: »

Hi,

I'm looking to diversify my portfolio by using Investment Funds or Trusts. But I'm not sure which is the best to use. I'm leaning towards Trusts as there is no annual management charge, correct?

The trusts which I'm looking at are: JPM Emerging Market, Standard Life Smaller UK Companies and Murray International Trust.

Thanks

Assuming you are talking about whether to invest in unit trusts or investment trusts.....

Clearly there must be a trust management charge to pay for the people who manage the trust. Historically, perhaps less so now, investment trust charges tended to be lower than those for unit trusts.

On the other hand investment trusts, being normal quoted shares, tend to be affected by the rise and fall of the overall market and so may be rather more volatile than unit trusts.

There are other differences, but I would suggest the net effect of chosing one rather than the other in the same sector is normally fairly small.

What I think IS important though is that first you chose what you want to invest in - ie the sector. Then you can decide whether a particular unit or investment trust best meets your needs. Dont buy something simply because it is an investment trust.