As a result, many investment trusts have outstanding long-term dividend growth track records. For this reason, speak with your tax consultant about any CIT investment. As part of FE Trustnet’s educational series, Thomas McMahon looks at what novice investors need to know about this type of product. However, CITs are a different breed of private fund. If you’re aiming to get your finances on track and you’re in or near retirement, then here’s your chance to MyWalletHero is The Motley Fool UK’s new personal finance brand devoted to helping you live a richer life. Collective investment trusts are big. CITs are essentially a functional equivalent of mutual funds—basically another comingled investment vehicle. What is less certain is what to call CITs. We may also publish information about consumer credit, loan, mortgage, insurance, savings and investment products and services, including those of our affiliate partners. Retirement 403(b) plans are qualified, tax-advantaged plans offered by employers to employees. Personally, I side with Schlichter in thinking that this is not a major problem. Diversified portfolio ... Held to bank fiduciary standard. Historically, mutual fund boards have gone where their management companies wish, rather than represent the interests of fund shareholders. But so far, perhaps due to the desire to avoid customer confusion, such efforts have generally stopped at two: institutional and retail classes.

Not so for CITs. History of Collective Investment Trusts . Nonetheless, just because CITs have not been punished for their legal structure in the past does not mean that such a thing could not occur in the future. This is advantageous as it protects investors from issues such as poor-performing portfolio managers.On the downside, one issue to be aware of with investment trusts is that because of their closed-ended structure, they can trade at premiums or discounts to their net asset value (NAV). This can minimise cash drag and potentially boost performance. So, the real answer for CIT’s existence lies elsewhere. Let’s conduct an investment search for CITs and compare these candidates to other mutual fund options.

While you do have to pay trading commissions when you buy or sell (usually around £10 or so), what you avoid are the fund platform fees that investment providers charge when you hold regular open-ended funds. However, this increasingly isn’t much of a problem. City of London, for example, has increased its dividend every year for over 50 years now.Finally, investment trusts are structured so that they have an independent board that is responsible for safeguarding investors. Whereas hedge funds and their brethren use exotic investment strategies (typically, by employing leverage and owning infrequently priced securities), CITs behave like public funds.

Firstly, because investors can’t suddenly demand their money back, portfolio managers don’t need to worry about holding cash for redemptions. ... Pros. Portfolio managers can also take a longer-term view. All rights reserved. This can add complications. 17 November 2012. Company No: 3736872.

Tax-exempt earnings. Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time.

It’s not hard to figure out what they are doing, simply from their names. Investment Vehicle? And the strongest lever that they possess, that of lowering costs, has already been used by CITs. Similarly, a poor-performing trust may trade at a significant discount, which is not ideal if you’re already an owner of the trust (although it could be beneficial if you’re looking to buy).Gearing (the ability to borrow to invest more) is another issue to consider with investment trusts. Not all of them use gearing, but plenty do. On the other hand, costs are low, and that is an enormous advantage. For example, the Another advantage of investment trusts is that they are closed-ended. More information about how The Fool collects, stores, and handles personal data is available in its Privacy Statement.Average performance of picks since inception. Collective Investment Trusts are pooled (or comingled) investment vehicles that are maintained by a bank or trust company—exclusively for a defined set of qualified retirement plans.