This paper presents work completed in order to investigate the importance of magnetic shunts in transverse flux machines. Two types of transverse flux machines with different configurations were designed and tested in the laboratory. The first type of machine is a transverse flux generator with inner rotor. This machine was designed according to one of the patents. The second type of the machine is a transfer flux generator with double coil. Both types of the generators were designed in such a way so that it was possible to implement magnetic shunts inside the machines. Finite-element method analysis and experimental results showed that transverse flux machines without magnetic shunts had a number of disadvantages compared to those with magnetic shunts. These disadvantages are: higher flux leakage in the stator cores, partial cancelation of flux linkage in the coils, higher cogging torque, and increased torque ripple. This paper showed that magnetic shunts played a significant role in the performance of transverse flux machines. As study showed, magnetic shunts complicate a manufacturing process and increase the weight of the machine. However, power to weight ratio of the machines with magnetic shunts is higher than that of the machines without magnetic shunts.