Companies whose sole business is to manage the investments it owns. A somewhat misleading term used for historical reasons.... more on: Investment trusts
Investment Trusts are companies which invest in the shares of other companies. Like unit trusts, they are collective investments which pool together the money of many investors. This money is then invested in a portfolio (or wide range) of companies which will be more varied than the small investor could achieve on his own.
A form of Collective Investment Scheme. An investment trust is a public limited company which issues shares to raise funds and then invests the funds in specified securities. When investors wish to realise their investment, they have to sell the shares to other investors in the secondary market or wait for the investment trust to be wound up. This feature gives the investment trust the description of being ‘closed-ended’. Once the issue of shares has taken place, the size of the investment trust in terms of number of shares will not be changed. This is in contrast to Unit Trusts, which are open-ended. See also Open-Ended Investment Companies.