Investment companies

What are investment companies?

Investment companies are companies that invest in a diversified portfolio of assets to make money for their shareholders. Investment companies can be investment trusts, venture capital trusts, and offshore and AIM traded investment companies.

Investment companies pool investors’ money and employ a professional fund manager to invest in a wider range of assets than most people could practically invest in themselves. This way even people with small amounts of money can gain exposure, at low cost, to a diversified and professionally run portfolio, spreading the risk of their investment.

Investment companies are listed on a stock exchange and there are over 400 investment companies in the UK responsible for the management of billions of pounds worth of assets on behalf of investors.

Investment companies at a glance

  • Are closed-ended – the number of shares in issue is fixed from the start
  • Allow you to pool your money
  • Have a board of directors
  • Can be a cost effective method to gain exposure to the stock market
  • Use professional management
  • Can have different share classes
  • Can use gearing (borrowing) to take advantage of investment opportunities
The value of your investments can fall and you may get back less than you invested

Stocktrade is a division of Alliance Trust Savings Limited, which is a subsidiary of Alliance Trust PLC and is registered in Scotland No. SC 98767, registered office, PO Box 164, 8 West Marketgait, Dundee DD1 9YP; is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority, firm reference number: 116115. Alliance Trust Savings gives no financial or investment advice. Calls may be recorded for training and security purposes.