Best investment trusts UK: recommended by our experts

Investment trusts may have been around for more than 150 years, but many people still don’t understand how they work or their potential benefits. These innovative products are the oldest form of collective investment and are trusted by many thousands of people nationwide.

But how do they work, and what are the various pros and cons? Do they provide a solution that meets everyone’s needs, or are there potential downsides? In our guide to finding the best investment trusts, we reveal everything you need to know about this fascinating area of investment.

What are investment trusts?

They are a type of pooled investment fund that helps individuals achieve their financial goals by providing access to a diverse range of assets. The manager at the helm of an individual trust will be responsible for determining the investment process policy and selecting the appropriate holdings.

However, unlike other collective investment vehicles such as unit trusts or exchange-traded funds (ETFs), investment trusts are structured as companies listed on the stock market, with shares that can be bought and sold like any other listed company. This structure allows them to invest in less liquid assets—such as private equity, direct property, or infrastructure—without being forced to sell holdings to meet investor redemptions. While the market price of the trust’s shares may trade at a discount or premium to the underlying net asset value (NAV), this reflects the unique structure of investment trusts rather than any inherent risk in the assets themselves. This reflects investors’ demand for that trust, ie it trades at a discount if there are more sellers than buyers or, vice versa, at a premium if there are more buyers than sellers.

Learn more about investment trusts here.

How investment trusts work

We have already touched on the fact that investment trusts differ from unit trusts, but let’s examine them in more detail to understand exactly how they work.

These are the areas we’ll cover:

• Closed-ended structure
• Trading on stock exchanges
• Discounts and premiums
• Gearing
• Independent board of directors
• Revenue reserve

Firstly, trusts have a so-called ‘closed-ended structure’ which means there will only ever be a fixed number of shares available to investors. This structure enables trust managers to make longer-term decisions because their buying/selling decisions aren’t influenced by constant inflows and outflows.

Trusts are also traded on a stock exchange. This allows investors to buy – and sell – shares at any time during regular trading hours. Such transactions are also very transparent.

Next, we’ll look at valuations. Trusts effectively have two values. The first concerns the assets in the portfolio, known as the net asset value (NAV). The second is the market capitalisation, based on the value of shares in circulation. As trusts are listed on stock markets and can be influenced by supply and demand, the value of the shares may differ from their underlying value. When demand is high, the shares may be worth more than the NAV. In this case, a trust will be trading at a premium to its NAV. However, the converse is also true. When demand weakens and the value of shares falls below NAV, the trust will be trading at a discount. It can be a good opportunity to buy when the trust is trading at a discount, but not always. That’s why you need to understand why it has happened.

Another interesting trait about some investment trusts is their ability to employ gearing, which can be both a positive and a potential negative. Gearing involves borrowing money to make additional investments, effectively allowing the fund manager to leverage the trust’s capital. The goal is not merely to cover the cost of the loan, but to generate returns that exceed the borrowing rate, enhancing profits for investors. However, gearing also increases risk. If the additional investments underperform, losses are magnified, meaning the trust can experience larger declines than it would have without leverage. As such, gearing requires careful management and a strong conviction in the investment strategy.

The next notable quality of trusts is that they have an independent board of directors whose role is to provide an additional layer of examination and oversight. Its role is to represent the interests of shareholders, which means overseeing the actions of the fund manager, monitoring performance and ensuring regulatory compliance.

Finally, an important feature of many investment trusts is the revenue reserve, which acts as a financial buffer to support consistent dividend payments to shareholders. Unlike some other investment funds, investment trusts can retain a portion of their income in these reserves during strong earnings periods. This allows the trust to maintain or even increase dividends during years when investment income is lower, providing investors with a more stable income stream. Revenue reserves also give the manager flexibility to reinvest income strategically rather than being forced to distribute it immediately.

Types of investment trusts

The first trust – the F&C Investment Trust – was launched back in 1868 and aimed to provide “the investor of moderate means the same advantage as the large capitalist”, according to its prospectus. Today, a would-be investor can choose from hundreds of trusts. Each will have its own objectives, focus areas, and preferred holdings. For example, active managers can generate growth or income from various industries and geographies, whether that’s US biotech firms or global green energy players.

Let’s look at the main types:

Equity income trusts

These trusts will aim to deliver a regular and, hopefully growing income stream by investing in dividend-paying companies. A prime example is the City of London Investment Trust, which has delivered consecutively increasing dividends for 59 years. This has made it one of the best investment trusts for income. This trust, launched in 1891, aims to generate growth in income and capital by investing predominantly in large UK companies with international exposure.

Growth-focused trusts

The focus here is on investing in areas that are expected to enjoy substantial growth over the next few years. This can include exciting areas such as technology, or a high octane option, such as the Scottish Mortgage Investment Trust. Despite its name, this fund doesn’t have significant exposure to either Scotland or mortgages. It typically holds between 50 and 100 companies that have been chosen for their strong growth prospects. The trust’s managers have a patient buy-and-hold approach to maximise total returns. They also follow a high conviction approach and can invest up to 30% of the portfolio in unlisted companies. Although the trust’s share price has been volatile, investors have been well rewarded by the returns achieved over the longer term.

Global v UK trusts

There are investment trusts that focus on UK-listed companies, as well as others that invest in stocks from around the world. For example, Fidelity Special Values primarily targets unloved UK companies and waits for them to come back into favour. The trust can hold some overseas stocks too, although this is limited to no more than 20% of the value of the portfolio. We believe it’s one of the best UK investment trusts let by an experienced manager in Alex Wright. Those wanting a more global feel may prefer the Murray International Trust. This can invest anywhere in the world – and within any sector. The focus is on maintaining a yield above average for investors.

Fixed income

Investment trusts don’t focus exclusively on equities. For example, Invesco Bond Income Plus focuses on investing in high-yielding fixed-income securities. The trust, which aims to provide capital growth and a high income, is well diversified across both countries and sectors. The team has demonstrated its ability to manage risk through diversification, while also maintaining a consistent dividend payout for several years.

Sector/thematic trusts

You may prefer to have more focused exposure to certain areas. For example, as its name suggests, the TR Property Investment Trust invests in the shares of property companies of all sizes. Well-run businesses in various sectors, including retail, office, and residential, are favoured, while a small amount will also be invested in UK physical property. Another option is the Polar Capital Global Healthcare Trust. This trust focuses on companies involved in areas such as pharmaceuticals and biotechnology.

Alternative asset trusts

There are also trusts providing exposure to alternative assets. For example, the BlackRock World Mining Trust invests in global mining and metals companies. Its experienced management team have the flexibility to invest where they see opportunities, including in unquoted companies. Investors can also benefit from an attractive dividend yield.

Top-rated UK investment trusts for 2025

When you’re looking at this area, it makes sense to consider which have been the best performing investment trusts in recent years – and establish why they’ve been so successful. FundCalibre has compiled a list of the most attractive investment trusts across various sectors, all of which are worth considering.

Why choose investment trusts?

Investment trusts offer numerous benefits. For example, many have delivered rising dividends for more than half a century – irrespective of the economic backdrop. Being traded on the stock market makes them easy to buy and sell during the trading day, while there’s also plenty of information available on their makeup and performance.

Many trusts can provide access to a wider range of alternative assets, such as infrastructure and real estate, while an independent board of directors looks after investors’ interests. However, a trust might not be suitable if you have an investment time horizon of less than five years or need a guaranteed return or income. While there are many well-managed portfolios available, a certain degree of investment risk will always remain. Therefore, anyone who is uncomfortable with this reality may need to look at alternatives.

How to choose the best investment trust for your goals

There are more than 300 investment companies holding a combined £260 billion of assets, according to data compiled to the end of August 2025 by the Association of Investment Companies*. Choosing the right one will depend on your financial goals, risk tolerance, and views on global sectors and markets. The ideal solution for you won’t necessarily be the same for someone else.

So, where do you start your search to find the best investment trusts?

Well, it all depends on your longer-term goals and which assets you favour. For example, the best investment trusts for growth may not be ideal if your goal is income. Similarly, compiling a list of the best global investment trusts is pointless if you only want UK exposure.

Maybe you’re saving to put your child through university or dreaming of retiring early and jetting off for a sun-drenched life in the Bahamas? If you don’t need the money for decades, you may prefer stocks that are growth-oriented, such as trusts focusing on the emerging markets. Alternatively, if you need another source of income to help make ends meet, then companies that pay regular dividends to their shareholders will be preferable.

Investment trusts for income seekers

Investment trusts are a very popular solution for income seekers because many of them have consistently increased their dividend payments for decades. Twenty trusts have increased their pay-outs for at least 20 consecutive years. Ten have done so for at least half a century, which is a remarkable achievement. As we have already mentioned, this is mainly due to their ability to hold back up to 15% of the income received in a good year and boost dividends during more challenging times. Of course, it’s important to remember that this won’t be guaranteed. Income from investment trusts can fall, as well as rise, in the same way as your capital.

How to buy investment trusts in the UK

The good news is that buying an investment trust is very straightforward. As they are publicly quoted companies, you can purchase shares easily via a stockbroker or investment platform. You can also invest in them through products such as Individual Savings Accounts (ISAs) or Self-Invested Personal Pensions (SIPPs). An online investment platform enables you to buy and hold a variety of assets, such as trusts, in one place and manage them easily.

Take your time to decide which is the most suitable. Your final decision should consider the level of charges you’ll pay, the customer service on offer, and the reviews of previous clients. Don’t automatically opt for the cheapest. While fees are obviously a key consideration, it’s value for money that really counts, so make sure you carry out your own research.

Learn more about how to invest.

Performance of investment trusts over time

The Association of Investment Companies maintains a list of trusts that have consistently increased their dividends for at least 20 consecutive years. They are known as dividend heroes, and here we spotlight those with the longest track records* dating back almost 60 years.

FAQs about Investment Trusts

Are investment trusts safe for beginners?

They can be, especially those with diversified holdings and low volatility; however, they do carry some risks, so you need to do your homework. Ensure you understand a trust’s objectives and that you’re aligned with its investment philosophy and asset allocation strategy.

How do I know if an investment trust is good?

Research is crucial. Examine the past performance of a trust and its results over various time periods as this will give you an insight into the manager’s success – or otherwise. You should also pay attention to the discount/premium, its dividend record, and the different fees.

Can I hold investment trusts in an ISA or SIPP?

Yes, most UK platforms allow investment trusts to be held within tax-efficient wrappers such as Individual Savings Accounts (ISAs) and Self-Invested Personal Pensions (SIPPs).

Do investment trusts pay dividends?

Many trusts – particularly those with an income focus – will pay dividends. Some companies have consistently increased their dividends for over 50 consecutive years.

Why do investment trusts trade at a discount or a premium?

The share price of an investment trust can trade above (premium) or below (discount) its net asset value (NAV), reflecting investor demand relative to the underlying value of the assets. While a discount can present a buying opportunity, it’s important for investors to understand the reasons behind it.

Some discounts persist because certain assets or sectors have fallen out of favour, or because the trust has structural or performance issues. Examining the trust’s discount history, which is publicly available through the Association of Investment Companies (AIC), can help investors assess whether the current valuation is likely to persist or represents a genuine opportunity.

What fees should I expect?

Ongoing charges typically range from 0.5% to 1.5%, plus platform fees and trading commissions. It’s essential to consider the fees you will pay to a trust, as they can significantly impact the overall returns generated.

Can I lose money with an investment trust?

Yes. As with any investment, your capital is at risk. Prices fluctuate with the market and trust performance, so there are no guarantees. However, researching the area and knowing the types of assets your trust will pursue can help you manage this risk.

What is gearing and how does it affect performance?

Gearing means borrowing to invest. This can amplify gains during the good times. However, it can also increase the losses suffered during down markets.

*Source: AIC, 31 August 2025