Investments that have no guarantee of safety of capital but are a potential for generation of capital gains which can account for 10% to 80% of a balanced portfolio. Examples include common shares, derivatives, convertible bonds, preferred shares and equity mutual funds.
Term of the Minute
- Investment Trust
A investment trust that usually generates cash flows from one business or operating company, unlike an investment fund, which generates income from a diversified pool or portfolio. The trust holds debt and equity interests of an operating business. Businesses that exhibit these characteristics may opt for a trust structure over a corporate structure to take advantage of tax efficiency.