We have extended our investment trust range to offer a much wider selection of the most popular trusts for you to buy and sell online. You can also check their value through our secure website alongside the other funds in your Fidelity portfolio.
The trusts are available to hold in all our accounts, including the Fidelity ISA and the Fidelity SIPP. This means that if you have trusts in several places, you could consider bringing them together with us, so you can check everything at the same time.
Although investment trusts have been around for a lot longer than other types of investment funds – almost 150 years – they are a lot like them in many ways. Your money is pooled with contributions from many other people and used to buy a portfolio of investments.
These are chosen and managed by an expert team, who are in charge of the day-to-day running of the trust and deciding when to buy and sell holdings. If they make good decisions, your investment is likely to rise in value. In addition, you can get access to a much wider, and more diversified, portfolio of investments more easily than you could hold on your own.
However, there is a key difference between investment trusts and other types of funds. Each trust is a public limited company (PLC) listed on the London Stock Exchange, which then invests in other companies. They have a limited number of shares on offer that people buy when they want to invest in the trust.
This means investors are also shareholders, so they have more rights and protection than unit-holders in funds such as OEICs and unit trusts. The shares can be purchased through stockbrokers, fund supermarkets and investment platforms.
As each investment trust is a company, it has a board of directors, who act in shareholders’ interests. They are independent of the investment manager – in fact, they appoint them – and are responsible for both setting the investment policy and ensuring the objectives are being met.
They must also hold an Annual General Meeting that allows shareholders to express their views and vote on key company policies and issues.
With OEICs and unit trusts, fund price is based simply on the value of the holdings (known as the net asset value, or NAV). When these assets rise or fall in value, the NAV does the same. However, as investment trusts are companies, they have two prices – the share price, which is set by the market, and the NAV.
Share prices are affected by supply and demand, so they can be different to the value of the trust’s holdings (the NAV). If you pay less than the NAV for your shares, you are buying at a "discount". If you pay more, you are buying at a "premium". Changes in the difference between the NAV and the share price can magnify the gains or losses on your investment.
As companies, investment trusts can also borrow money to invest. This process is known as gearing and the aim is to generate additional returns in excess of the cost of borrowing – though there is no guarantee this will be achieved.
The value of your investments may go down as well as up and you may not get back what you invest. Fidelity Personal Investing can give you information and guidance on products and services but cannot give advice based on personal circumstances. If you're unsure of the suitability of an investment please speak to an authorised financial adviser.