Geared Investment Trust

What is Geared Investment Trust.?

This form of investment involves borrowing money to be invested in equity shares. The term “gearing” in this respect means that the money is reinvested in shares and other varied securities in order to extract maximum return on it.
Ads by Google

These kind of shares hold more value during positive stock market conditions. This borrowed money increases the amount which is to be reinvested and which in return makes for higher returns. On the other hand, a trust that holds high level of gearing can also fall further in case stock market is performing badly, in which case, investors can face a lot of disappointment.

Gearing can have a considerable effect on the performance of an investment trust. Successful management and assessment of this kind of investment plan is a risky idea as this kind of an investment can prove to be more volatile than any other plan. One needs to tread carefully on this plan.

Edited and Updated 15th February 2014

You can leave a response, or trackback from your own site.

Leave a Reply

You must be logged in to post a comment.

Powered by WordPress