Investment trust 101: How gearing works

One of the key differences between an open-ended fund and a close-ended fund (or investment trust) is gearing, which basically means borrowing money. FundCalibre’s Sam Slator explains more.

See our other videos explaining discounts, revenue reserves, the role of an independent board and what an investment trust actually is. Check out our YouTube channel to find out more.

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.