Page 3: Investment Trusts as sources of funds
Investment Trusts provide invaluable funds to business by acting as intermediaries. They channel funds from financial institutions and households to businesses through the Stock Market and these funds can help businesses grow and expand.
Investment Trusts provide their investors with investments tailored to investors' individual requirements eg the degree of risk an investor is willing to take and the rate of return he/she expects. Investors aim to gain from holding Investment Trusts in two ways:
- they often receive a dividend - their share of the profit earned by the Investment Trust in a given period eg 6 months or a year
- the value of their investment may grow over time if the share prices of the companies in which they have invested go up, particularly if their Investment Trust has invested for growth. However, the value of investments can go down as well as up, and this is the risk that Stock Market investors take.