They’re tax efficient – but should you invest in trusts?

Looking to invest tax efficiently? In recent years, some Irish investors have turned to UK-based investment trusts, which have been around for some 150 years, as a way of doing this.

Like an investment fund, a trust is a pooled investment, which means they offer investors a wide range of opportunities. More like an ETF, however, it is quoted on a stock exchange, so it looks like a fund but trades like a company. What about reinvesting this income? It is possible to reinvest dividend income in the trust, but this doesn’t happen automatically; instead, you’ll need to find someone selling their shares at a price you’re happy to pay.As with other investments, the returns can be substantial. The top-performing trusts are spread across different sectors, including tech and European smaller companies, but what they do have in common is that they are all actively managed.

This led to a sell-off of investment trusts, and the average discount – or the gap between the share prices of trusts and the net value of their assets – widened substantially. Back at the start of 2022, for example, the discount was around 2.2 per cent – but had risen to 17 per cent by the end of October, according to the Association of Investment Companies , the trust lobby group. It has since fallen back to 11 per cent.

Unlike investment funds, trusts are typically not liable to deemed disposal, which, Barrett says, investors “hate with a passion”. This means that you won’t have to settle any tax owed every eight years, which saves you the hassle of doing so. It also allows your investment to grow for a longer period free of tax.

“In certain situations, when there is a lack of diversification if things go wrong you could potentially be exposed,” says Delaney.

Business Business Latest News, Business Business Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Johnny Ronan firm dispute with Fortress Investment Group enters Commercial CourtDeveloper claims US firm owes him €3.3m
Source: IrishTimes - 🏆 3. / 98 Read more »

Cliff Taylor: Ireland’s model for attracting multinational investment is looking frayedThe State risks losing out as a bidding war breaks out for major projects between the big countries, including huge subsidies for US companies to encourage them to invest at home
Source: IrishTimes - 🏆 3. / 98 Read more »

Ireland risks losing out on investment in tech sector, State agencies warnIreland at disadvantage in accessing EU-funded initiatives over absence of arrangements to vet key personnel
Source: IrishTimes - 🏆 3. / 98 Read more »

Fully let investment on Dublin’s South William Street seeking €3.6mProperty occupies prime south-city location and is generating annual rental income of €241,484
Source: IrishTimes - 🏆 3. / 98 Read more »

Cosgrave Property Group seeks €48.5m for prime office investment and residential sitesDeveloper continues Dublin asset selldown with proposed disposal of fully let offices and lands at Northwood in Santry Demesne
Source: IrishTimes - 🏆 3. / 98 Read more »

Quintas rebrands to Xeinadin, €40m investment plannedIrish accountancy company Quintas has said it is rebranding as Xeinadin in Ireland.
Source: RTEbusiness - 🏆 16. / 61 Read more »