Investment trusts 101

clock • 5 min read

Ever wondered how an investment trust discount works? Or what a split cap trust is? Kyle Caldwell runs through a glossary of all the key terms you need to know.

What is a discount and why is it an opportunity for investors? A discount is when the share price of an investment company is lower than the net asset value (NAV) – the underlying investments held by the company. The discount is a percentage of the NAV. For instance, if the NAV is 100p and the share price is 80p then the discount is 20%. Many investors see investment companies trading on wide discounts as a buying opportunity. Investors buy into an investment company on a discount in expectation it will narrow, as subsequently this enhances returns. If in the above example th...

To continue reading this article...

Join Investment Week for free

  • Unlimited access to real-time news, analysis and opinion from the investment industry, including the Sustainable Hub covering fund news from the ESG space
  • Get ahead of regulatory and technological changes affecting fund management
  • Important and breaking news stories selected by the editors delivered straight to your inbox each day
  • Weekly members-only newsletter with exclusive opinion pieces from leading industry experts
  • Be the first to hear about our extensive events schedule and awards programmes

Join now

 

Already an Investment Week
member?

Login

More on Investment Trusts

Trustpilot