Education Centre


What are Investment Trusts?

The Merchants Trust PLC is a listed public company that invests in other companies and is quoted on the London Stock Exchange. Investment trusts invest in a wide range of different assets such as the shares and securities of other companies that trade on the world’s stock markets. By investing in an investment trust you gain access to a wider range of investments that you could normally buy yourself. Your investment is also managed by a professional fund manager.

Investment trusts are 'closed-end funds' as there are a fixed number of shares and this number does not usually change regardless of the number of investors. The price of the shares reflects the value of the underlying holdings of the trust, but is also affected by the demand for the shares. For example, if there are more buyers than sellers, the share price tends to rise and vice versa.

Benefits of Investment Trusts

A cost-effective and diversified portfolio
Investment trusts own shares in a variety of different companies, so buying shares in Merchants Trust PLC will effectively give you a diversified portfolio of UK large cap stocks. This spreads your risk, as you are not reliant on the success of just one or two companies. And buying shares in an investment trust can be less costly than purchasing the underlying stocks individually.

Looking after shareholder interests
Because Merchants Trust PLC is an investment trust and an independent company listed on the London Stock Exchange, the investment manager is accountable to the Trust’s board of directors. The board is completely autonomous and ensures that the interests of shareholders are looked after. The Merchants Trust board of directors is particularly experienced; as well as providing investors with the reassurance of a diligent environment of checks and balances, they also provide the Trust with invaluable knowledge and economic insight.