investment trust
Noun: A type of financial company that pools money from many shareholders and invests that collective capital in a diversified portfolio of securities, such as stocks and bonds, issued by other corporations or governments. It is a way for individuals to own a share of a large, professionally managed investment portfolio.
An investment trust is a collective investment vehicle. Investors buy shares in the trust itself, and the trust's managers use the capital to buy a range of other securities. * She decided to put her savings into an investment trust to gain exposure to the technology sector. * The performance of an investment trust depends on the skill of its fund managers and the assets in its portfolio.
- Closed-End Fund: In many markets, particularly the UK, "investment trust" is synonymous with a closed-end investment company. This means it has a fixed number of shares, which are traded on a stock exchange. Their share price can trade at a premium or discount to the net asset value (NAV) of the underlying holdings.
- The investment trust is currently trading at a 5% discount to its net asset value.
- Investment Company: A broader term that can include both investment trusts (closed-end funds) and mutual funds (open-end funds).
- Fund: A general term for a pooled investment vehicle.
- Closed-End Fund: The specific structural type most commonly associated with an investment trust.
- Mutual Fund (or Open-End Fund): A different type of pooled investment that continuously issues and redeems shares based on demand, priced directly at its net asset value.
- Closed-end fund
- Collective investment scheme
- Managed fund
- Net Asset Value (NAV): The total value of the trust's assets minus its liabilities, divided by the number of shares. It represents the intrinsic value per share.
- Share Price Discount/Premium: The difference between the market price of the trust's shares and their NAV.
- Portfolio Diversification: The key benefit provided by an investment trust, spreading risk across many different assets.
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a financial institution that sells shares to individuals and invests in securities issued by other companies
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