Investment trusts: general: what are they?
Despite the name, investment trusts are in fact limited companies with a fixed capital structure incorporated under company law.
Investment trusts invest in a broad range of shares and securities and use professional managers to oversee their investments. So buying shares in investment trusts offers investors one way to diversify their portfolios, spread risk and gain access to this professional management.
As limited companies, investment trusts are within the charge to Corporation Tax; but which of their profits are subject to tax in practice depends upon whether they are approved or unapproved (see CTM47110).