Information is power. Investors have easy access to a wider range of authoritative information about investment trusts than ever before, thanks to the internet and digital communications – by Ian Cowie


Facts and figures, news and views are now available on your phone, tablet or computer 24 hours a day. But you can’t believe everything you read online and not all sources of information are equal. For example, a good place to start when considering investment opportunities around the globe is Britain’s leading investment trust manager’s website1. It also makes sense to keep an eye on information published by the London Stock Exchange2 where most investment trust shares are bought and sold.

It makes sense to consider a wide range of factors when deciding which – if any – investment trusts might meet your needs. Ignorance is not bliss for investors. Accurate information and intelligent analysis can help you make better-informed decisions and bigger profits.

‘you can’t believe everything you read online and not all sources of information are equal’

Please note the value of investments and the income from them can fall as well as rise and investors may not get back the full amount invested. Investment trusts may utlilise gearing (borrowing) which will exaggerate market movements both up and down.

Planning a well informed approcach to investment

Time spent on preparation is rarely wasted and this saying is always worth bearing in mind before you part with money. For example, when you are preparing to invest you should consider carefully important factors such as your attitude to risk and reward, as well as how long you can afford to remain invested.

How will you feel when share prices fall and what are you hoping to achieve by investment? Do you require income, growth or a mixture of both? What is your attitude to volatility – or the tendency for share prices to fluctuate without warning? You can find out more about these questions – and other issues you should consider before investment3.

Beware common investor mistakes

Investors who do their homework and plan ahead should be able to avoid some common pitfalls which may affect others who act in haste. For example, an important issue to consider before investment is whether this will involve having too much money in one place. Diversification – or not having all your eggs in one basket – is a simple and effective way to diminish the risk inherent in stock markets.

‘it still makes sense to consider holding a diversified range of investment trusts in different sectors or with different risk and reward characteristics’

Investment trusts offer various degrees of diversification by spreading individual investors’ money over large numbers of underlying shares and other assets. But it still makes sense to consider holding a diversified range of investment trusts in different sectors or with different risk and reward characteristics.

Beware of ‘hot tips’ – or recommendations to buy shares you may see online – and remember the old City adage: “Where there’s a tip, there’s a tap”. In other words, someone who encourages you to buy may be selling. You can see other common investor mistakes to avoid4.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Identify your investment priorities and which investment trusts might meet them

Different investment trusts deliver shareholder returns in different ways. For example, some aim to pay regular and rising dividends to meet the needs of income-seeking investors5, such as people entering or in retirement. Meanwhile, other investment trusts pursue capital growth6 which may be more appropriate for younger investors aiming to accumulate a larger pension fun.

When considering which investment trust – if any – might meet your needs it may be helpful to bear in mind guidance from an independent organisation, such as the Association of Investment Companies7. Remember that share prices can fall without warning and you may get back less than you invest.

Where to find out about past performance, yields, discounts – and what’s under the bonnet

Past performance is not a guide to the future but prospective investors may wish to consider how investment trusts’ share prices and net asset values have performed in the past. You can find independent performance statistics over various periods here2 and here8.

The FE Trustnet website also provides interesting information about each investment trust’s yield – that is, dividend income expressed as a percentage of the share price. There is also data about premiums and discounts – where investment trust shares can be bought for more or less than the trust’s net asset value; the total value of each trust’s assets, minus any liabilities such as debt or gearing.

In addition to factsheets giving information about who manages an investment trust, its structure and objectives, you can “look under the bonnet” and see the names of the 10 biggest shareholdings in each trust9. You can also see how each investment trust’s assets are allocated over geographical regions or industrial sectors.

The more you look, the more you see

The more research you do before making an investment, the more likely you are to make an informed decision. Finding out about all the options available to you should help you to avoid mistakes and identify the right investment trusts to meet your needs.

It has never been easier to research investment trusts because there is more information, news and views available online than ever before. Most of this data is free but beware that some sources are more authoritative and reliable than others.

Self-interest is the one motivation you can always rely on and doing your own research is one way to get the job done properly. Information is power and can help investors find increasing income or great growth opportunities to make more profitable decisions.


1JP Morgan Asset Management

2London Stock Exchange

3The Association of Investment Companies

4The Association of Investment Companies

5JP Morgan Asset Management

6JP Morgan Asset Management

7The Association of Investment Companies



10The Association of Investment Companies


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