Investment Trusts Vs OEIC Fund

Hi guys,

I’ve just started my investing journey 6 months, and I am thinking of transferring ISA to Trading212 and want to put the majority of my funds in Baillie Gifford Trusts.

Could someone explain the difference between funds and trusts?

Are trusts more profitable as they have the ability to extra funds?


Both have advantages and disadvantages.

The IT could use leverage, it’s good to leverage the gains during good times, but is bad during bad times, because it also leverage the losses. The OEIC are not allowed to use leverage.

The IT don’t have to bother about the redemption, because it is a closed-end fund, so the cash position is smaller (the IT manager could invest more) than on the OEIC, that needs to have some cash to face the redemption of shares. Another disadvantages of OEIC for being an open-ended fund are that on bad times, if there are a lot of redemption, it must sell some of the portfolio’s assets on a bad moment, with worst valuations, the inverse happens when on the good times there are more net inflows, and the OEIC fund manager, will have to buy more assets when they are more overvalued.

Have a look in here for more information:

Motley Fool US and UK are good sources of information and ideas. :wink:

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Trusts can also have an easier time investing in private equity since liquidity isn’t an issue. They’re ability to hold back cash can also be beneficial in down turns.


OEICs also have concentration rules, so an Investment Trust could invest say 20% of its assets in Tesla, whereas an OEIC couldn’t.

OEICs trade at their swung NAV, calculated once daily. IT’s can be traded throughout the day, at a premium or discount to their NAV.

There are pros and cons to both.


Financial Times Guide to Investment Trusts: Unlocking the City’s Best Kept Secret by John Baron.

Trusts 90% of the time, perform far better than there OEIC equivalent.
Just look at Baillie Giffords Trusts and OEIC versions.


Thank you all for your responses!

I’m going to look have at the information/links you have gave me :pray: