Investment Trust v Unit Trust Questions

bowlhead99

Yes, basically the closed ended nature means that ITs do not need to 'handle' subscription or redemption requests. They may of course act opportunistically to issue new shares (within limits) or buy back some on or off market to help control discount or premium but are not at the beck and call of their own investors' sentiment.

So:

Thrugelmir wrote: »

If a fund manager was forced to liquidate sizable shareholdings of particular companies then this would influence the market price.

That is very true. If you use a vehicle that is not forced to accept subs or reds, then you will not be forced to do deals on the market to accommodate them.

This means that they can be effective for holding smaller companies (where relative size of the holding makes it problematic to deal quickly at a reasonable price), or thinly-traded companies (where there isn't enough market liquidity to satisfy ad-hoc purchase or sale requests without moving the price), or illiquid assets like real estate, unlisted shares, certain 'real assets', infrastructure partnerships, commitments to private equity funds etc.