Investment trusts give you the opportunity to access a wide choice of balanced, managed funds. They allow you to benefit from stock market returns without having to do all the research and trading yourself.
When putting cash into an investment trust you can also benefit from the tax advantages of an ISA.
What is an investment trust ISA?
Unlike unit trusts and traditional stocks and shares ISAs, investment trusts are listed companies with independent boards of directors. The board appoint fund managers to invest shareholders’ money in other companies and assets.
As listed companies, investment trusts have a finite number of shares unlike unit trusts which are ‘open ended’. The price of these shares is determined by the normal supply and demand seen in the stock market.
Investment trust ISAs let you take advantage of all the benefits of an investment trust while also benefiting from the tax advantages of an ISA.
ISA investment trust options and contribution limits
All the best ISA investment trust accounts have annual contribution limits which you cannot exceed, this is the same annual allowance that applies to all investment ISAs. However, you can typically either invest a lump sum or on a monthly basis (generally from around £50 per month).
There are many investment trusts to choose from. These range from more mainstream UK or global equity trusts to those investing in more specialist areas, such as emerging markets, technology or property.
How to compare investment trust ISAs
When searching for the best investment trust ISA there are several factors you should take into account.
Firstly, you have to consider what type of ISA investment trust you want to invest in. Are you looking for income or capital growth? How much risk do you want to take? Do you want to invest in the UK or overseas?
You should then compare the investment trust performance of the trusts you are considering. By comparing what the investment returns have been over the last few years can help you to establish which investment trusts have performed well in relation to others in their sector.
You should also consider the ISA investment trust price when you invest. You will generally pay a commission for investing in the trust although sometimes you will find lower fees through a discount broker.
You may also pay annual management charges and so make sure you compare these before you invest as they can significantly affect your profit.
The best ISA investment trust accounts tend to combine good investment trust performance with competitive fees.
