funduffer wrote:MDW1954 wrote:
Be careful. Some of these infrastructure shares are formally ITs (eg Greencoat UK Wind), and some are investment companies. So requirements vary.
But, as has been said, very bond-like.
MDW1954
Perhaps you could enlighten me on the major differences?
Presumably, an IT invests in the shares of other companies, whereas an investment company invests in the assets themselves. Similarly, a REIT invests in the assets (property) themselves. I know all 3 are different in some ways, but what difference does it make to the investor?
Disclosure - I own REIT's, IT's and some of the investment companies mentioned here.
FD
An investment trust is an investment company incorporated in the UK that is prepared to pay out at least 85% of its revenue profits as a dividend each year. In return for that it pays no corporation tax.
A REIT is simply a property company which agrees to distribute at least 90% of its income profits ( called PIDS) in return for which it pays no tax on these profits. There is a 20% with holding tax on the distributions which can be recovered if the shares are held in an ISA or SIPP
An investment company is neither of the above but is usually incorporated outside of the UK to avoid these taxes.
The late Gengulphus would have corrected any of my errors but that is my broad understanding. Others may feel free to correct anything mistake or indeed to expand on what I have said.
Fundamentally it does not make a lot of difference to the investor. I think I hold examples of all three.
Dod