Investment Trusts

Choose from over 300 investment trusts and Real Estate Investment Trusts

Investment trusts, unlike unit trusts, can borrow money to buy shares, which is known as gearing. This extra buying potential can produce gains in rising markets but also accentuate losses in falling markets. Investment trusts generally have more freedom to borrow than unit trusts that can be sold to the general public.

Unlike with a unit trust, if an investor wants to sell their shares in an investment trust they must find someone else to buy their shares. Usually this is done by selling on the stock-market. The investment trust manager is not obliged to buy back shares before the trust’s winding up date.

The price of shares in an investment trust can be lower or higher than the value of the assets attributable to each share – this is known as trading at a discount or at a premium.

How investment trusts work

Conventional investment trusts

Investment trusts are constituted as public limited companies and issue a fixed number of shares. Because of this, they are referred to as closed-ended funds.

The trust’s shares are traded on the stock exchange like any public company.

The price of an investment trust’s shares depends on the value of its underlying assets and the demand for its shares. Investment trusts are allowed to borrow money to buy shares (a practice known as gearing). Different investment trusts will do this at varying levels. It’s worth checking before you invest because the level of gearing can affect the return on your investment and how risky it is.

Split Capital Investment Trusts

These run for a specified time, usually five to ten years, although you are not tied in.

This type of investment trust issues different types of shares. When they reach the end of their term, payouts are made in order of share type.

You can choose a share type to suit you. Typically the further along the order of payment the share is the greater the risk, but the higher the potential return.

Risk and return

Bear in mind the price of shares in an investment trust can go up or down so you could get back less than you invested. The level of risk and return will depend on the investment trust you choose. Find out what type of assets the trust will invest in, as some are riskier than others.

Look at the difference between the investment trust’s share price and the value of its assets as this gap may affect your return. If a discount widens, this can depress returns.

Find out if the investment trust borrows money to buy shares. If so, returns might be better but your loses greater. With a split capital investment trust, the risk and return will depend on the type of shares you buy.

Access to your money

You can sell your shares at any time, although investment trusts are most suitable for long-term investments (over five years).

What are investment trusts?

Investment trusts are funds that are publicly listed as companies on the London Stock Exchange, and so are traded like shares. Investment trusts have a manager as well as a board of directors, who uphold the interests of the investors.

Pello Capital Limited offers investments and services to clients, which are primarily considered to be high risk investments. Some investments such as contracts for difference use leverage which can magnify gains but equally can magnify losses. Leveraged products may lose investors more than the amount they initially invested. This website is provided for information purposes only. It is not an offer to sell, or a solicitation of an offer to buy, any security, nor enter into any agreement or contract with Pello Capital Limited. All information provided is indicative and subject to market conditions and availability. Not all financial products are suitable for all investors. Before entering into any transaction you should ensure that you understand and have made an independent assessment of the suitability and appropriateness of the transaction into which you are entering and the nature and extent of your exposure to risk of loss in light of your own objectives, financial and operational resources and other relevant circumstances. You should take such independent investigations and such professional advice as you consider necessary or appropriate for such purpose. Past performance is no indicator of future success.


Pello Capital Limited, company number 5267797. Pello Capital Limited is authorised and regulated by the Financial Conduct Authority (FCA) with Financial Services register number 449720 and is a member of the London Stock Exchange (LSE) and Nex Exchange.