Newbie question re investment trusts

EdGasket

puk999 wrote: »

Possible silly question alert: How would the investment company collect their charges if none of the underlying assets generated returns?

They would take it from uninvested cash. If that had run out, they would sell a few shares. Don't worry, the poor investment managers won't go hungry whatever happens!

puk999

EdGasket wrote: »

Don't worry, the poor investment managers won't go hungry whatever happens!

That is a huge relief

I'm finally getting my head around investment trusts thanks to this forum.

Reaper

While learning about investment trusts be sure you understand (unlike a Unit Trust) they are allowed to borrow money and invest that too. This is known as gearing and in the fact sheets they issue you should be able to discover how much they are geared.

In theory if they spot an opportunity it means they can move fast and grab it, unlike a unit trust that can only invest the money they have been given. When stock markets are rising this tends to mean they rise even faster. On the other hand if their investments are doing badly it may make them fall faster and further.

Just something to be aware of.

Ainsley1

and note that they can hold back profits in good years to ensure dividend payouts in the lean years thus giving investors some income stability. Several have many years records of doing that and growing returns year on year at the same time.