Investment Trusts

Abstract

An Investment Trust is a limited company which has, as its main business, the purchase of stocks with the purpose of holding them for an extended period. The managers of such a company will be seeking stocks which show a potential for long-term growth. They will seldom become involved with the day-to-day management of companies in which they acquire an interest, though they would vet the managements carefully before making a large-scale investment. They often choose to invest in the smaller successful companies, ‘nursing’ them through the period when they would find it difficult to make an issue of stock to the public. By the time these companies are strong enough to bid for public support the investment trust will be able to sell their stake at a substantial profit.