Single Equities or Investment Trusts

I’ve never been a huge advocate of Investment Trusts, preferring to seed my money in individual equities where I see a massive potential upside. Note the use of the word, potential.

By their very nature, Investment Trusts are risk averse when compared to single equities. Spreading the risk – albeit, often across numerous equities in the same sector – potentially limits the return and while I’m young(ish) I think, to hell with it, let’s get rich quick or die trying.

Having said all of that, if you really believe in a sector – alternative energy for example – then surely an Investment Trust dealing exclusively in that sector, should at least be considered? Right?

On the plus side, you’ve usually got a qualified fund manager who knows his or her industry inside out, running the show and making the investment decisions. Through that depth of knowledge they may know of equities in your chosen sector that you’d never considered. And of course they have the option of investing in private business ventures, that, for whatever reason, aren’t listed on any boards.

If you’re heavily invested in a sector as an individual, in a sense, aren’t you playing the role of fund manager in your own Investment Trust? If so, why not leave it to the professionals?

Anyway, these are questions that are running through my head as I watch my meagre portfolio yo-yo up and down again this week. Should I sell it all and invest the lot in an Investment Trust? It’d probably take the sharp edges off the highs and lows but to a degree, it’d kill the fun of investment and making your own decisions – however bad they end up being.