How do I research an investment trust?

Investment trusts now have to produce standard factsheets giving charges in pounds and pence, and potential performance in favourable and adverse markets.

The aim of watchdogs, who made them compulsory from the start of this year, was to give investors important information about how trusts work and make it easier to research and compare them. 

We take a look at what the investment trust ‘key information documents’ or KIDS provide to investors below. 

Source: Baillie Gifford

5) How long should I hold it and can I take money out early?

Baillie mentions the industry’s rule of thumb recommendation that you should invest for at least five years, ‘for illustrative purposes only’.

‘Equity investments should be seen as long-term investments however there is no minimum (or maximum) holding period for the shares. The shares can be sold when the markets on which they trade are open,’ it says.

6) How can I complain?

This gives standard information about complaints and contact details.

7) Other relevant information

This is the ‘any other business’ section of a KID. 

Baillie has chosen to reiterate the warnings it already gave in the ‘What are the risks and what could I get in return’ section about its scenarios of future performance being based on past evidence.

These potential performance figures are the aspect of KIDS that the trust’s manager and board, and Baillie itself, have expressed anxiety about.

‘They are clearly concerned about that so re-emphasised it,’ notes Lowcock. ‘It’s conscientious, and suggests concern. They also say that performance is not a guide to the future. This is stuff they thought to re-emphasise.’

How do investment trusts work, and what is NAV? 


They invest in the shares of other companies and are known as closed ended, meaning the number of shares or units the trust’s portfolio is divided into is limited – unlike unit trusts or open-ended investment companies (OEICs) where investors’ money is pooled to invest in shares, bonds or other funds.





This gives new investors the opportunity to buy in at a discount, but means existing investors’ holdings are worth less than they should be.

An investment trust trading at a discount to NAV may be regarded as cheap because the shares cost less than its overall value – although there might be good reasons why, such as investors being justifiably pessimistic about its prospects.



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