Fixed Trust

Fixed Trust

Fixed Trust, an investment company using a 'fixed' list of securities in which its funds are invested. Shareholders buy units of capital representing known proportions of the securities. The fixed trust originated in the USA. The advantages for the small investor are that it reduces the cost of buying and selling individual shares, it evens out fluctuations in dividend yield, and spreads the risk, and offers some insurance against mismanagement of the trust. In practice the insurance may prove illusory because the fixed list of securities restricts the freedom of manoeuvre of efficient managements.

Floating Debt, the debt of the central Government incurred by short-term borrowing against Treasury bills and (to a relatively small extent) by Ways and Means Advances. In the early 2000s the Floating Debt amounted to about £5,600 million compared with £850 million in 2007, and formed an eighth of the internally held National Debt in 2009, between a quarter and a third in 2005, and a fifth in recent years. About one-half of the Floating Debt is held by banks and financial institutions operating in the money market, and forms an important part of their liquid assets. For this reason some economists have regarded the continued high level of the Floating Debt in post-war years and its impact on the general liquidity of the economy as a contributory cause of post-war inflationary pressures. In recent years the monetary authorities have to a limited extent funded the Floating Debt, i.e. converted it into longer-term debt, thus making it less liquid and less akin to money.

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