This means they can magnify gains by borrowing at a certain rate of interest, and investing that money in shares which produce a higher return. Of course this ability to become geared brings with it a greater risk too.Unlike unit trusts, investment trust have no restrictions on how they invest. They can hold property as an investment, for example, and also buy shares in unlisted companies. Again, this is riskier, but can mean potentially higher returns.There is one type of investment trust which can be particularly useful for specific investment aims. Split capital-investment trusts invest in the same way as any other investment trust, but they issue several different types of share.This allows investors to choose precisely the type of return and level of risk they want.

The most common types are capital shares, which assume the capital growth of a trust not allocated to other shares, and income shares which take on the dividends of all the shares.Other types include zero-dividend preference shares. They pay no dividend but are instead entitled to a fixed return when the trust is wound up. They are low-risk because they have first call on the trust's money at the end. Capital shares, on the other hand, are the most risky because they come last in the pecking order.Shares in investment trusts can be bought through a stockbroker, or directly from the management group. Most investment trusts accept regular savings and their shares can be held in an individual savings-account to shelter them from capital-gains tax liability.But it is the underlying investment, rather than the vehicle, which is important.

"People get too caught up with which vehicle they should be in, when what they should be asking is which area of the market should I be in," says Mr Hollands.* AITC: 020-7431 5222; www.itsonline.co.uk* Best Investment: 020-7321 0100. If you think the FTSE 100 Index has had a bad month, shedding more than 7 per cent of its value since the middle of September, take a look at the falls suffered by some individual stocks. In the same period, shares in internet service provider Freeserve have dropped to £1.70 from around £3, and Cantab Pharmaceuticals' stock price has plummeted to 75 pence from £3. If you think the FTSE 100 Index has had a bad month, shedding more than 7 per cent of its value since the middle of September, take a look at the falls suffered by some individual stocks.