Investment trusts The directors of an investment trust company are responsible for the management of a portfolio of shares in the same way as the manager of a unit trust but the legal structure is different. The total value of units issued by a unit trust equals the value of the underlying investments. In an investment trust, a fixed number of shares are issued on the stock market and the price of the trust company's shares will rise or fall independently of the value of the portfolio it holds. This can make it a more volatile investment. It is also possible for an investment trust to borrow money to buy shares, (which a unit trust cannot) and this may give it an advantage over the unit trust when interest rates are low and the markets are rising. As with any equity investment, however, the opposite could also be true. Investment trusts could be attractive to the more sophisticated investor while unit trusts are a less complex investment for anyone new to equity based investment. It is strongly recommended that professional advice be sought before considering investment trusts. Performance tables of investment trusts are to be found in 'Money Management' and other financial magazines. Further information about investment trusts is available from the Association of Investment Trust Companies, 16 Finsbury Circus, London EC2M 7JJ. The association issues an extensive information pack free. Real Estate Investment Trusts (REITs) REITs provide a means of investing in property without the need to own the property itself. They are collective investments where investors’ money is pooled to buy mainly commercial but also private property. The company, an ‘Investment Trust Company’, (see page 24) then sells shares in the company which pay dividends and which can rise and fall in value depending on the conditions of the market and the values of the properties owned within the trust. They are tax efficient in that the investor does not pay income tax on the rental income generated in the trust nor capital gains tax on the rise in value of the properties themselves. Instead, the normal rates of income and capital gains are is charged as with any share holding. As with any share, they can be bought and sold at any time and there are no restrictions on the number of shares held or the time they are held. They can be bought within an ISA and a SIPP. The risks are comparable to any holding in a specific market sector, they will fluctuate in value with markets in general but also with the movements in that particular sector.