I'd like to truncate the text displayed at chosen number of characters, maintaining the layout of the text.

The built-in function doesn't retain the format.

Am I missing something?
Do I need a particular plug-in to do this? Anyone has any suggestion?

If you use a limit, then all HTML tags are being stripped.
This is the default behaviour and it cannot be changed since it would possibly break the HTML code of your site.

You can however manually specify the introtext of your item so it keeps its HTML formatting.

Here is an autoreadmore plugin gruz.org.ua/en/extensions/autoreadmore-plugin-for-joomla.html
It takes care of cleaning up HTML not to break the things at the blog view. Has a number of options. Can strip introtext by characters, words, paragraphs.

Is easy to setup to work with k2.