Investment Trusts -  What Is An Investment Trust & How Does It Work?

So what is an investment trust? Well an investment trust is in fact a company which has its shares traded on the London Stock Exchange and they hold a portfolio of shares of other companies and these shares are the only assets the investment trust has. Investment trusts are allowed to borrow money so they can add to their investments and they are taxed on the same basis as unit trusts. They can also invest in companies which are not listed on the stock exchange and some specialise in this area. Of course the investment trusts that invest in unlisted companies are more risky than the investment trusts that mainly invest in stock market listed companies.