What do investment trust funds account for?

Investment trust funds specifically account for external investment pools that are operated by governmental entities. These funds are designed to manage the investments of multiple participants or entities, allowing them to pool their resources and invest collectively. This structure enhances investment efficiency and can lead to better returns due to the economies of scale.

In the context of financial reporting for governmental entities, investment trust funds provide a framework to report assets, liabilities, and changes in net position for these investment pools, which often include resources from various local governments or agencies. By categorizing these funds appropriately, financial statements can reflect the nature of their operations, ensuring transparency and accountability concerning public funds.

Understanding this concept is crucial for recognizing how governments utilize collective investment strategies to manage public resources effectively.