| Investment Trusts and Real Estate Investment Trust |
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| Written by Kathryn Smith |
| Sunday, 04 April 2010 17:43 |
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An Investment Trust is a form of collective instrument. It is a close-end fund that is constituted as a public limited company. The money from investors is pooled together from a sale of a fixed number of shares. Usually there is a fund manager hired that invests in the stocks and shares of various companies. In an Investment Trust one can usually find only a board of directors and no employees.
An Investment Trust is a form of collective instrument. It is a close-end fund that is constituted as a public limited company. The money from investors is pooled together from a sale of a fixed number of shares. Usually there is a fund manager hired that invests in the stocks and shares of various companies. In an Investment Trust one can usually find only a board of directors and no employees. The first Investment Trust was the Foreign & Colonial Investment Trust and it started in 1868. The Investment Trust is the oldest form of investment, it is the largest global growth trust in the world and it is still open to investment. An Investment Trust is always a close-end trust. What this means is that there are fixed numbers of shares issued that are listed on the stock exchange. A stockbroker can sell and buy these shares just like any other shares. So why is this different for the investor? In the case of an Investment Trust the share can be traded independently of the fund's net asset value and there can often be a substantial discount. You will have to pay stockbroker commissions if you have an Investment Trust. A bid - offer spread on the trust's share price is known as the difference between the price at which you sell and the price at which you buy. These Investment Trusts are taxed according to its investments but the capital gains are not taxed. Investment trust can be better aligned with the investor's interests.This actually avoids a double taxation that would otherwise arise when shareholders sell their shares they have in the Investment Trust and are taxed on their gains. The Real Estate Investment Trust is a type of security that sells like a stock on all the major exchanges and it invests in real estate directly, either through properties or mortgages. The Real Estate Investment Trust usually receives special tax considerations and offer investors high yields as well as a high liquidity method of investing in real estate. Gold is also one of the best ways to invest your money. People have discovered that purchasing gold is a safe and profitable investment for the future especially now when the prices are high. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Learn from professionals how buying gold can help you in times of recession. |