Investment trust opportunities

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Investment trusts, unlike collective funds such as unit trusts and open-ended investment companies, spend far less on marketing and, as such, are often overlooked. Here are five advantages worth thinking about:

  • Although charges on all funds are slowly coming down, investment trusts tend to levy lower fees than unit trusts and open-ended investment companies.
  • Some investment trusts appeal to income-seekers because they are able to grow dividends.
  • Trusts are, arguably, better equipped to increase dividends than unit trusts or open-ended investment companies because they are allowed to hold back some income they receive from holdings
  • unlike rival funds they can borrow money to increase exposure to markets. This can work in favour of shareholders if subsequent equity gains surpass the cost of borrowing.
  • The average investment trust has outperformed its unit trust counterpart over one, three, five, ten and 15 years.