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What is an investment trust?
An investment trust works in much the same way as a fund. It's a way to invest in a range of companies without picking individual shares.
Like funds, trusts invest in a 'basket' of underlying assets such as shares, bonds or property. But unlike funds, they are structured as companies listed on the London Stock Exchange. Investors in a trust share in the capital gains (or losses) and in any income payments made. As a result, trusts have two values: the value of the investments held in the trust and its share price.
Why do people invest in trusts?
Investment trusts have various bells and whistles that investors can use to their advantage. These include ‘rainy day’ reserves, which have enabled the vast majority of trusts to weather the Covid-19 dividend drought. by either maintaining or increasing dividend payments to shareholders.
Investors can also pick up a potential bargain when a trust is trading on a discount. Performance can be supercharged in rising markets by 'gearing'.
Investment trust performance can involve rather more ups and downs than funds, because of gearing and the effect of movements in the discount. But if you're invested for the long term, it is not worth worrying too much about short-term swings.
Most popular investment trusts
Below are the top 10 most purchased investment trusts by ii customers over recent months. For more detailed insights and performance data, visit our top investment trusts page.
Most purchased investment trusts in Q2 2022
|2||City of London|
|3||BlackRock World Mining|
|4||Ruffer Investment Company Ord|
|6||Greencoat UK Wind|
|7||Personal Assets Ord|
|8||Gore Street Energy StorageFund Ord|
|9||Smithson Investment Trust|
|10||Polar Capital Technology|
Source: interactive investor. Note: the top 10 is based on the number of “buys” between 1 April and 30 June 2022.
Why choose interactive investor to buy investment trusts?
- We offer the widest choice – more than 40,000 UK & global investment options, including over 600 investment trusts.
- We charge a low, flat fee of £9.99 per month. Most other investment platforms charge a percentage fee that grows with your investments.
- The £9.99 monthly fee includes our Stocks & Shares ISA, Trading Account and Junior ISA (add a SIPP for £10 a month).
- We give you a free trade every month. There are also no trading fees with our regular investing service.
How to invest in investment trusts with ii
Choose how you want to invest
We've made it simple:
- Top up monthly with our regular investing service and pay no trading fees.
- Or buy & sell investments as and when you choose. Your first trade each month is free.
Latest investment trust news and insights
Best investment trusts for income
Investors looking for an investment trust that generates income should firstly consider UK equity income and global equity income trusts. These both invest in dividend paying companies, to produce an income for shareholders.
Other income options for investors to consider include commercial property and infrastructure.
One of the main advantages of an investment trust compared with funds is its ability to hold dividend reserves. We explain this in more detail below in the investment trust FAQs.
As a result, many investment trusts have impressive track records in growing their dividends year in, year out.
Trusts with increasing dividends
The most recent list of investment trust “Dividend Heroes” published annually (15 March 2021) by the Association of Investment Companies (AIC) shows that six trusts have now achieved increasing dividends for 50 years or more:
- City of London Investment Trust (one of our Super 60 funds)
- Bankers Investment Trust
- Alliance Trust
- Caledonia Investments
- BMO Global Smaller Companies
- F&C Investment Trust (one of our Super 60 funds)
There are 19 investment trusts that have raised dividends for more than 20 years in a row. This is slightly down on last year when 21 trusts were 'dividend heroes'.
The table below shows the 11 investment trusts that have increased dividends for 40 years or more. Most invest in global businesses that pay dividends. The remaining three investment trusts invest in dividend-paying shares listed on the UK market. Please note: figures correct as at 15 March 2021.
|Company||Sector||Number of consecutive|
years dividend increased
|City of London||UK equity income||54|
|BMO Global Smaller Companies||Global||50|
|JPMorgan Claverhouse||UK equity income||48|
|Murray Income||UK equity income||47|
|Scottish American||Global equity income||47|
Learn more about investment trusts
The value of your investments can fall as well as rise and you may not get back all the money that you invest. Please note the tax treatment of these products depends on the individual circumstances of each customer and may be subject to change in future.