Investment trusts and OEIC funds both offer pooled investments, but they work differently. Understanding the differences helps you choose wisely.
Investment Trusts
Investment trusts are listed companies that hold investments. They can borrow (gearing) to potentially boost returns. Trade like shares on stock exchange.
- Can use gearing to boost returns
- Trade as shares
- Discount or premium to NAV
OEIC Funds
Open-Ended Investment Companies priced at NAV once per day. No gearing. Simpler structure but less flexibility.
Which is better?
It depends. Investment trusts offer potential for higher returns through gearing but are more complex. Funds are simpler.
- investment trust
- funds
- investing
- UK