What are they?
A UK based investment trust is a company that is listed on the London Stock Exchange in just the same way as UK public listed companies are, such as British Telecom, ICI or Marks & Spencer. The business of an investment trust is to invest in the shares of other companies in specified sectors of the market, countries or areas of the world. This provides investors with an underlying spread of investments with the particular aim which has been set for that investment trust in which they are invested.
What are their advantages over Unit Trusts or Managed Funds?
Tax efficiencies. The trust companies do not incur tax on capital
gains made within the trusts. However, New Zealand residents investing
in UK Trusts are subject to taxation under the New Zealand Foreign
Investment Fund (FIF) rules. (Enacted 2006). For more information
about this, please contact
International markets, chiefly the London Stock Exchange, set
their share price. Unit Trust entry and exit levels are based
on asset backing. For UK listed trusts supply and demand sets
the entry-exit level.
Low Management charges. They cost as little as a third to run.
The listed company pays the fund managers' fees rather than it
being taken directly from the share price or unit price as is
the case with Unit Trusts.
The fund managers can borrow to leverage investment.
The fund managers can buy back shares to support the price
when the directors of the company think this is necessary.
How can I track my investment?
Investors electing to use our EQUITYplusPrivate
Client Service are provided with reports on their total portfolio
including New Zealand, tax compliance reports.
Unit trust investors are able to obtain a much wider spread of
risk than most could achieve from their own resources. Buying into
a unit trust gives immediate access to a diversified portfolio.
This spreading of investment reduces volatility and thus risk.
Costs of purchasing/selling?
Of Sum Transacted (Larger parcels open to negotiation)
Minimum Brokerage Charge
Stamp Duty Inclusive in 2.5% on Buy Transactions Only
The Next Steps
In order for us to purchase direct shares on your behalf, you will
need to fill out a Sharebroking Account Application form. We also
require a cheque for 30% of your first transaction made payable to
Equity Investment Advisers Ltd if you have not
purchased shares through EQUITY before. To find out which UK Investment
Trusts may be suitable for your portfolio contact
us or subscribe to New Zealand