INVESTMENT TRUST Meaning and
Definition
-
An investment trust, also known as a closed-end fund, is a type of collective investment vehicle that pools money from multiple investors to create a diversified portfolio of securities such as stocks, bonds, and other financial instruments. It is managed by a professional investment management company on behalf of the investors.
Investment trusts are structured as publicly traded companies and have a fixed number of shares that are bought and sold on stock exchanges. Unlike open-end mutual funds, which issue shares at net asset value (NAV), investment trusts trade at a price determined by supply and demand in the market, often deviating from the NAV.
These trusts aim to generate capital growth and income for their shareholders through various investment strategies. Some investment trusts focus on specific sectors, countries, or asset classes, while others adopt a broader approach. They may also have specific investment objectives, such as growth, income, or a combination of both.
Investment trusts offer several benefits to investors. Firstly, they provide diversification by investing in a variety of assets, thus spreading the risk. Secondly, their closed-end structure allows professional managers flexibility in managing the portfolio since they are not constrained by daily inflows or outflows of funds. Lastly, investment trusts often offer enhanced liquidity compared to other types of collective investments, as their shares can be bought and sold on stock exchanges throughout the trading day.
It is important to note that investment trusts carry market risks, and the value of shares can rise or fall based on the performance of the underlying investments. Investors should carefully consider their investment objectives, risk tolerance, and seek professional advice before investing in these vehicles.
Common Misspellings for INVESTMENT TRUST
- unvestment trust
- jnvestment trust
- knvestment trust
- onvestment trust
- 9nvestment trust
- 8nvestment trust
- ibvestment trust
- imvestment trust
- ijvestment trust
- ihvestment trust
- incestment trust
- inbestment trust
- ingestment trust
- infestment trust
- invwstment trust
- invsstment trust
- invdstment trust
- invrstment trust
- inv4stment trust
Etymology of INVESTMENT TRUST
The term "investment trust" has its origins in the financial industry. The word "trust" comes from the Old Norse word "traust", meaning "confidence" or "reliability". In the context of finance, a trust refers to a legal arrangement where one party holds and manages assets on behalf of another party or beneficiaries.
The word "investment" refers to the act of putting money or resources into something with the expectation of generating income or profit. It derives from the Latin word "investire", which means "to clothe" or "to dress". This reflects the idea of "putting on" or "committing to" an endeavor.
When combined, "investment trust" refers to a specific type of financial institution or company that pools investors' money to invest in diversified portfolios of stocks, bonds, and other assets.
Similar spelling words for INVESTMENT TRUST
Infographic
Add the infographic to your website:
