Investment trusts and unit funds

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bgengine

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Hi can anyone tell me the main differences between the above ?

Which is though to be the best ?

thanks
 
By investment trusts do you mean UCITS or something else? As far as I know, for all intents and purposes as far as the punter is concerned, there is no great difference between the two.
 
Are you talking about the difference between a trust and a fund set up as a company? I think the difference is that with a trust you actually own the assets, whereas with the company, you own the company that own's the assets. Its a legal difference and the difference to the investor is minimal AFAIK. I'm open to correction though.
 
Unit funds are collective investment products that own assets (e.g. shares, bonds, etc.). The price of the product reflects the values of the assets owned by the fund. Investment trusts are companies that own shares in other companies and the shares of the owning company are quoted on the stock market. So with unit funds you buy an investment product; with investment trusts you buy shares in a company. AFAIK, investment trusts are a UK thing; I don’t now if there are any IE ones.
 
Thanks for the replies ...
I'm not sure but from my understanding ....Investment trusts tend to have lower costs and therefore better returns .. but would like to hear other opinions.
Also they may be a Uk thing ( as mentioned above) that that mean they cannot be accessed by residents of ROI ?
Has anyone done this before ?
I have looked at the various Unit funds offered in ireland by the various financial institutions, but they inturn take their commision on top of the fund manager commision... so I looked at investing directly in the funds themselves - many funds insist you go through a broker - which I wish to avoid if possible. There seem to be more of a selection of funds available in the UK and it was there I came accross investment trusts. Is it possible to invest in the UK Investments funds ?

thanks
 
[broken link removed]As the above article describes, the essential thing is that an Investment Trust is a closed fund. That means its shares can only be bought and sold between willing investors and so there is a supply and demand factor overlaid on top of the intrinsic Net Asset Value (NAV). As the article explains they almost invariably trade at a discount of maybe 10% or more.

So, you might say they are a cheap access to the underlying assets, unfortunately they will likely also be cheap when you go to sell. Also you will likely find a bid/offer spread i.e. you will get a lesser discount when buying than when selling.

The more common collective investment funds are open ended, which means the fund itself guarantees to trade at NAV by creating and cancelling units/shares as required.

Personally, I would think the extra uncertainty of the supply/demand factor in Investment Trusts is undesirable and probably not compensated by the discount.
 
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