Best Way Of Buying Investment Trusts

aspiration_2

Recently many of you enlightened me on ITs. ThanksCould someone tell me the best way of buying ITs please ? I know the best way to buy shares & Funds is via a fund supermaket. But is it better to buy ITs directly from the trusts ?Further, I heard that ITs are a better bet than Funds. Your views please.

Aegis

aspiration wrote: »

Further, I heard that ITs are a better bet than Funds. Your views please.

Depends what you mean by "better" I guess. They're potentially higher-risk and higher-return than unit trusts and OEICs because the fund manager can borrow money to take advantage of a situation he feels he can profit by. Trouble is that this can backfire and result in magnified losses rather than gains.

david78

It is usually cheaper to buy/sell investment trusts directly with the management company. Most offer good value savings plans for lump sum or regular savings. These can be ISA or non-ISA accounts. Cost for buying can be free up to 1% with 0.2% fairly typical. Cost for selling is similar or a fixed £20.

The snag with investing direct is you can usually only purchase the trust or trusts that a particular company manages, so to get a good diversification you may have to open several accounts.

If you want an approach similar to a fund supermarket both Alliance Trust Savings and Hendersons offer suitable products. (You can also use a discount or execution only stockbroker of course). In my experience the ATS scheme is good value for lump sum investments and poor value for monthly savings where a fee of £7.50 is paid on each deal.

cheerfulcat

ITs are investment companies. You can buy shares in them through a stock broker, just like any other company's shares.

Further, I heard that ITs are a better bet than Funds

They don't have the extra costs associated with unit trusts/OEICs and other collective funds. As Aegis has written, the managers are allowed to borrow to invest, which can magnify losses as well as gains, but not all of them do this.

There is more information on ITs on the AIC website and at Trustnet.